The most common atheist challenge to free will:

"Another question. How do we believe in predestination and free will. I often hear. 'If God is all knowing than you have no free will. For example if you have the choice between two pairs of pants and God already knows what one your going to choose than you had no choice in it.'
Now I don't make this up but I hear it from other people who are usually athiest and agnostic or even Christians who just don't believe that God is all knowing. How do we answer this as Catholics?"

This is a very common argument, I've heard it myself, and it's simply a misunderstanding of what knowing entails on the part of atheists who make it.

The Church has not explained in precise detail just how free will and predestination cooperate, only that they do. There are several theories within the Church, stemming mainly from St. Thomas Aquinas, St. Molinas and St Augustine, and so there are three theological branches dealing with it: Thomism, Molinism and Augustinian. Thomists and Molinists each tend to focus more on one aspect than another, the more heavily predestinarian are the Thomists, the more heavily will focused are the Molinists.

The Church has not declared one or the other or neither or both to be correct, largely because she has not needed to. Most times when the Church defines a dogma for the faithful it is out of need, in opposition to a heresy which has become too common or a misconception that is spreading, etc. Hence the dogmatic declaration of the sacramental presence of Christ, Body, Blood, Soul and Divinity in the Eucharist via transubstantiation when that was challenged by Luther and consubstantiation, hence the declaration that Christ is both fully human and fully divine in response to things like Arianism and Gnosticism. It is most likely the case that both Thomism and Molinism have part of the truth, but miss out on something. As for Augustinian thought on the subject, I can't say I have been educated in it, so out of ignorance I shall hold my tongue.

The easiest response to the challenge you quoted is to note that knowledge does not equate to will. In other words, they are assuming that God's knowledge is predicated on God willing, that God knows an event occurs because God MAKES the even occur, but this is an assumption that they bring into the equation with them. It is NOT part of the meaning of knowledge, nor is it implied. It's something they read into it.

The reality is that the knowledge of God of our actions could be predicated on several things. It could be predicated, as St. Thomas Aquinas taught, on God's nature, as He is outside the universe and able to observe it in its totality all at once. It could be predicated on the fact that God is immanent within the Universe, and so is at all places and times simultaneously. It could be both. It could be neither.

If, for example, it is one of those two, or both, then God's knowledge is based on our actions and therefore not the cause of our actions. In other words if God knows what we will do tomorrow because He is observing us today and tomorrow and yesterday in the same instant, then our actions are not necessarily caused by Him. Knowledge, then, does not mean CAUSATION. It merely means knowledge, and the atheist claim is refuted.

Some believe that this facet of God's knowledge being contingent upon our actions means that God is not truly omniscient, or that it creates a logical problem, though I do not agree. I believe omniscience refers to the ability to know all things which logically can be known. If God has created actors with legitimate choice, then what logically can be known is always known by God via observation of His Creation, since the only way to know, logically, what an actor with legitimate choice does is to observe it.

No matter how you slice it, predestination is a belief of the Church, and in its essence is the understanding that because Heaven is atemporal, and God knows every event of our lives in one moment, whereas for us it takes a lifetime, God knows who is in Heaven with Him, and because our existence in Heaven is predicated on accepting the Grace He offers us, His will is intrinsic in the process. It is the degree to which His will is present, and its forcefulness, that Catholics can have legitimate disagreement about. We all agree that God's will and grace must be present, and that the human will must be present. That our will must be present is also a teaching of the Church, for the Church says that Love is an act of the Will, and that we were created for love. We could not have a genuine love for God if we lacked a will, yet this is why we were created. So, in some way or other, we have a will, thus we are made in the image of God.