"We want everybody ... we want 100 per cent evacuation. If you decide to stay, you are on your own," he said.
"This storm is so powerful and growing more powerful every day that I'm not sure we've seen anything like it."
New Orleans is still struggling to recover from Hurricane Katrina in August 2005, when heavy rains and strong winds flooded 80 per cent of the city and killed about 1,600 people across the region.
Forecasters have warned it is still too early to say whether the city will take another direct hit.
Gustav has, so far, killed more than 80 people in the Caribbean, and if forecasts hold true, would make landfall on Monday afternoon, somewhere between East Texas and western Mississippi.
|Federal agencies say they are better prepared to evacuate the city than in 2005 [AFP]
Scarred by the still-fresh memories of Katrina, roads around New Orleans were jammed and hundreds of people lined up to board buses.
William Harpur, a New Orleans evacuee, said: "I thought it's gonna hang a right, it's gonna hang a left, it's not gonna be a problem until yesterday afternoon, when they said it's in the same corridor, it’s not changing, and I thought here we go again."
Nagin estimates that about half the population has already left and admitted officials were worried that some people would try to stay.
Even before he ordered the evacuation, most hotels had closed, and the airport was preparing to follow suit.
Federal agencies, which had failed to cope with the challenge of Hurricane Katrina, say they are well prepared to handle the evacuations this time.
Energy companies, whose 4,000 platforms in the Gulf produce a quarter of US crude oil and 15 per cent of its natural gas, braced for Gustav by evacuating personnel and shutting down three-fourths of their oil production.
Katrina and Hurricane Rita, which followed it three weeks later, wrecked more than 100 Gulf oil platforms.
John McCain, the presumptive Republican presidential candidate, and Sarah Palin, his running-mate, are due to visit Mississippi on Sunday to inspect preparations for the arrival of Hurricane Gustav.
McCain has already warned that his party may have to suspend its convention next week, because of the storm.
"It wouldn't be appropriate to have a festive occasion while a near tragedy or a terrible challenge is presented in the form of a national disaster," he said.
The Republican national convention, scheduled to open on Monday in St Paul, Minnesota, would see McCain awarded official nominee status as the party's presidential candidate.