At about 4.35am local time on Friday the huge blasts jolted residents awake. The extent of any possible damage was not immediately known.
An initial explosion sent flames of red and orange shooting into the pre-dawn sky. A series of smaller blasts followed, and then acrid, black smoke could be seen even in the dark. The vibrations were felt all the way downtown.
"We're trying to get a hazmat (hazardous material) team out there right now," a New Orleans police official told cable network CNN.
He said several railroad cars had blown up and "the main concern right now is what it is."
The explosions appeared to originate close to the east bank of the Mississippi River, near a residential area and rail tracks. At least two police boats were at the scene.
Chaos has spread through this desperate city since Hurricane Katrina struck, despite the promise of 1400 National Guardsmen a day to stop the looting, a $10.5 billion recovery bill in Congress and a relief effort US President George Bush called the biggest in US history.
The hungry beg for help, bodies lie along flooded sidewalks, and bands of armed men have thwarted fitful rescue efforts.
Gunfire in some areas on Thursday halted search and rescue efforts.