Hurricane Dean has struck Mexico's Yucatan Peninsula near the border with Belize, bringing driving winds and lashing rain.
Cancun and other tourist resorts were spared a direct hit as the storm came ashore at 0330 (0830 GMT) about 40 miles (65km) north-east of Chetumal.
The storm has weakened to Category Three, with winds of 125mph (205km/h) as it crosses land.
It could strengthen when it hits sea again after crossing the Yucatan.
The US National Hurricane Center (NHC) in Florida said the eye of the storm had made landfall near the town of Majahual.
At 1200 GMT the centre of the storm had moved inland about 40 miles (65km) north-west of Chetumal, travelling west at about 20mph (62km/h).
Last-minute evacuations took place along the coast as Dean was expected to bring a heavy flood surge.
The NHC said the Yucatan Peninsula, Belize as well as Guatemala and northern Honduras could expect heavy rainfall which could cause flash floods and landslides.
Tens of thousands of tourists have been evacuated from resorts in the Yucatan but many others are still there, huddling in shelters.
The resorts have been boarded up and offshore oil facilities are closed but there is concern for residents of poor communities living in flimsy homes.
Andrea Montalvo, of the US-based Spanish-language Telemundo television network, said the storm was wreaking havoc in the Mexican city of Chetumal.
"Inside the hotel it is really bad, every 10 or 15 minutes you can hear windows shattering and people are coming out of their rooms in panic," she said.
City officials said there were power outages as the wind knocked over trees and sent debris flying through the air.
Ernesto Calzada from Quintana Roo radio and TV told the BBC: "I looked out of my office window and saw an enormous tree close by topple over."
Further south, in Belize City, officials closed the hospitals and urged people to head inland, saying the town's shelters were not strong enough to withstand the hurricane.
Mexican President Felipe Calderon, who is attending a trade summit in Canada, said that he would leave on Tuesday after a meeting with his US and Canadian counterparts.
The hurricane has already claimed at least 11 lives in the eastern Caribbean, but largely spared the low-lying Cayman Islands on Monday.
Cancun and other popular Mexican resorts are escaping a "direct hit" but that has not stopped around two-thirds of Cancun's tourists leaving the area.
Some holidaymakers camped overnight at Cancun's airport to find a flight while others were turned away.
Police officers have been deployed to prevent looting while residents boarded up their homes ahead of the storm.
Mexico's state-oil company, Petroleos Mexicanos, has evacuated its workers and shut down production on the offshore rigs.
The hurricane is moving steadily west over the Yucatan and may regain strength when it hits sea again over the Bay of Campeche on Tuesday night, the NHC said.
It is due to hit Mexico's coast for a second time near Tampico in the state of Veracruz.
Dean is expected to be less damaging than the Category Five Hurricane Wilma in 2005, which lingered over the Yucatan for a day, killing 10 people and wrecking large areas of Cancun.
Category Five storms are rare - only three have hit the US since record-keeping began.
In the US, the return of the space shuttle Endeavour was brought forward by a day, to Tuesday, in an attempt to beat the hurricane should it eventually reach Texas, where Nasa's mission control is based.