Hurricane Felix has made landfall in north-east Nicaragua as a Category Five storm - the strongest of its kind.
The storm has the potential to cause "catastrophic damage", says the Miami-based National Hurricane Center.
Thousands have been fleeing coastal areas ahead of the storm, but many indigenous people are said to be stranded on the Honduran border.
Felix, with winds of 257km/h (160mph) is the second Category Five storm to hit the region in less than a month.
The NHC had earlier downgraded the storm, but later said it was strengthening again.
It said the storm could dump up to 30cm (12in) of rain in isolated parts of northern Honduras and north-eastern Nicaragua, possibly bringing flash floods and mudslides.
At 1200 GMT on Tuesday, the eye of the hurricane was located on the coast west or very near Punta Gorda, Nicaragua, about 15km (10 miles) north-north-east of Puerto Cabeza.
Meanwhile, Tropical Storm Henriette has reached hurricane strength as it heads for Mexico's Baja California peninsula.
It caused landslides in the Mexican city of Acapulco at the weekend that killed six people.
The storm is currently 185km (115 miles) south-east the peninsula and is expected to hit on Tuesday afternoon.
Flooding fears
Hurricane Felix developed in the Caribbean just two weeks after Hurricane Dean killed 18 people in the region. 
"There could be serious damage and material, like human, losses, if people do not take precautionary measures," said Honduran President Manuel Zelaya.
His Nicaraguan counterpart Daniel Ortega said he was cutting short a visit to Panama, to lead emergency efforts.
Despite the hurricane being extremely powerful, winds are confined relatively close to the eye of the storm, says BBC meteorologist John Hammond.
Hundreds of tourists have been evacuated from the islands of Honduras, while both Honduras and Nicaragua have been evacuating Miskito Indians who live along the coast on either side of the border.
But there are reports of transport shortages, and many of the indigenous population are thought to be stranded. 
A storm surge of six metres (18 feet) above normal levels would be highly dangerous for those living in the isolated coastal swamps.
"There's nowhere to go here," teacher Sodeida Rodriguez, 26, told the Associated Press news agency.
In Belize, people were said to be stocking up on emergency supplies and boarding up windows.
On Sunday, Felix struck Aruba and two of the Netherlands Antilles islands near Venezuela - Bonaire and Curacao - but damage appeared slight.
The sixth named storm of the Atlantic hurricane season, Felix demolished a concert venue when it hit Grenada on Saturday.
The Atlantic hurricane season is expected to peak on 10 September.
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