"Army personnel have seen pyroclastic material, burning material," Miguel Munoz of the government's National Emergency Office told the Reuters news agency.
The remaining civilian and army personnel in Chaiten, 10km (6 miles) from the volcano, have left, he said.
Chaiten can only be reached by air or boat, so Chilean naval vessels have been helping people leave.
Thousands of other people have been evacuated from the region, including residents of Futaleufu, to the east of the volcano.
Mechanic Patricio Ide, 40, was evacuated from Chaiten to Puerto Montt, 200km (125 miles) away.
"Everything is so uncertain," he told Reuters.
"This could last a month, three months, maybe we can never return. We are so worried."
Major risk
Chilean officials said ash, smoke and molten rock had been thrown from the volcano.
The town of Chaiten, closest to the volcano, is now deserted
After a surge in activity on Tuesday, officials said the volcano's two craters had fused, helping ease pressure.
But a government volcano expert warned there could be a big eruption at any time.
"There could be a major explosion that could collapse the volcano's cone," said Luis Lara of the National Geologic and Mining Service.
Sitting on the edge of the South American and Nazca tectonic plates, Chile is in one of the most volcanically active regions on Earth.
Experts say that about 20 of its more than 100 active volcanoes are in danger of erupting at any time.
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