Ophelia is the first hurricane to hit the United States since the much more powerful Katrina killed hundreds in the US Gulf Coast and displaced one million people two weeks ago.
It has already claimed its first fatality.
A 19-year-old woman was killed when the car she was riding in slid off the highway in heavy rain and crashed into trees east of Raleigh, police sources said.
"If you have not heeded the warning before, let me be
clear right now: Ophelia is a dangerous storm," Governor Mike Easley said from Raleigh, North Carolina, appealing especially to those in flood-prone areas to evacuate.
On Thursday morning, Ophelia's centre was pinpointed 32km south-southeast of Cape Lookout, North Carolina. It is expected to hit Cape Lookout early on Thursday then move near the Outer Banks, the chain of islands along the state's northern coast.
The storm's strongest winds hammered the state's south and central coast on Wednesday. Schools, seaports, ferries and businesses were closed and 1700 people went into shelters along the North Carolina coast. More than 123,000 customers had lost electricity.
Squalls strafed the coastline and kicked up battering waves that gnawed at beaches and washed over roads as Ophelia crept along, parallel to the coast at about 11kph.
Ophelia had top sustained winds of 136kph and could strengthen slightly, weather forecasters said. Storms of Ophelia's magnitude can flood coastal areas and fell trees and power lines.
Ophelia has top winds of 136kph
and could strengthen slightly
They rarely cause structural damage but Ophelia's slow pace meant coastal buildings would have to endure those winds for a day or more.
The storm ripped off roofs near Morehead City on the state's central coast and washed away part of a fishing pier on Atlantic Beach.
"We started getting the bulk of it after dark, so it is hard to judge (the damage)," said Allen Smith, director of Carteret County Emergency Services in nearby Beaufort. "But I have [a] sick feeling we are going to be looking at a lot of damage in the morning."
More than 30.5cm of rain had fallen on Oak Island at the mouth of the Cape Fear River, said meteorologist Jeff Orrock with the National Weather Service in Raleigh.
More than 120,000 homes and business were without power in eastern North Carolina, electric utilities said.
On Ocean Isle Beach, south of Carolina Beach, a 15m section of beachfront road was washed out by heavy surf and the only bridge to the island was closed.
"I have [a] sick feeling we are going to be looking at a lot of damage in the morning"
Carteret Counting Emergency Services, Beufort, North Carolina
Video broadcast by Durham's WTVD-TV from Carteret County on the central coast showed a section from the end of a hotel's fishing pier breaking off and floating away.
Jetnella Gibbs and her family made their way to a shelter at a Craven County high school after the rain started Tuesday.
"We noticed the street was starting to fill up, and I said, 'It's time to go,'" she said. "I know if this little bit here has flooded the street, what will it do when it really pours?»"
Forecasters at the US National Hurricane Center said Ophelia could dump up to 38 cm of rain on parts of North Carolina and send an 3m storm surge over the coast and up into the rivers.
Mandatory evacuation was ordered for islands, beach towns and flood-prone areas in six coastal North Carolina counties and voluntary evacuation was urged for parts of nine others.
Easley urged people to heed the evacuation orders where they could still travel safely, especially if they lived in
Katrina killed hundreds and
displaced one million people
areas flooded by faster-moving storms in previous years.
"These floods are going to be worse than anticipated yesterday," Easley said.
"Once the high winds come, we cannot get in and get you out - cannot get you by boat, cannot get you by helicopters, cannot get there by plane."
A hurricane warning was in effect for most of the North
Carolina coast, alerting residents to expect hurricane conditions within 24 hours. More than 700,000 people live in the warning area, the US Census Bureau said.
"These floods are going to be worse than anticipated yesterday"
North Carolina Governor
Buffeting winds made it unsafe to cross some of the high-rise bridges linking islands with the mainland. In North Carolina's southernmost county, Brunswick, 30cm of rain had fallen, and toppled trees made some roads impassable.
Shingles flew off roofs in Onslow County beach communities near the US Marine Corps' Camp Lejeune, and fire destroyed a home that firefighters were unable to reach.
"They were impeded by three feet of water from the Bear Creek, which had overflown its banks," Assistant County Manager Lori Brill said.