Ray Nagain, the mayor of New Orleans, said: "This is still a big, ugly storm, still strong and I encourage everyone to leave."
He has ordered an evacuation of the city of 239,000 citizens.
Officials said there was enough food, water, ice and other supplies stockpiled for one million victims over the next three days.
Nearly two million people fled the area in one of the biggest evacuations in US history.
Fewer than 10,000 people remained in New Orleans, according to reports.
Police and several thousand national guard troops patrolled the city in a bid to prevent looting.
More than 11 million residents in five US states have been threatened by the fast-moving storm.
Over a million people in New Orleans have been evacuated ahead of the giant storm [AFP]
John McCain, the US presidential nominee for the Republican party, said most activities planned on Monday for the first day of his party's convention in Minnesota, Missouri would be suspended because of the hurricane emergency.
"I hope and pray we will be able to resume some of our normal operations as quickly as possible," McCain said.
Oil companies shut down nearly all production in the energy-rich Gulf of Mexico, a region that normally pumps a quarter of US oil output and 15 per cent of its natural gas.
But Gustav failed to draw as much power as once feared as it rolled across warm Gulf of Mexico waters.
Forecasters said it was unlikely to grow stronger now and would begin to weaken as it moves inland.
US crude oil futures slipped to below $115 a barrel on Monday morning as fears of major damage to oil facilities in the Gulf of Mexico eased.
Prices had hit more than $118 per barrel in a special trading session on Sunday.
The US National Hurricane Centre said Gustav was still likely to toss up "an extremely dangerous storm surge" of up to 14 feet, which could test the holding power of rebuilt levees that failed during Hurricane Katrina.
It is expected to swamp parts of Louisiana, Mississippi, Arkansas and Texas with up to 30cm of rain and 50cm in some areas.
Gustav's approach stirred uneasy comparisons to Katrina, the most costly hurricane in US history, which killed about 1,500 people and caused over $80bn in damage almost exactly three years ago.
New Orlean's mayor ordered an evacuation of the city [AFP]
Long lines of cars and buses streamed out of New Orleans on Sunday after the evacuation was ordered.
One resident, Vanessa Jones, 50, said she had planned to stay but changed her mind after watching the news all night.
"I can't take a chance because so many people died in Katrina," she said as she prepared to board a bus headed to an unknown destination.
The government lined up trains and hundreds of buses to evacuate 30,000 people who could not leave on their own.
Nagin said 15,000 had been removed from the city, including hundreds in wheelchairs.
Harvey E. Johnson, the US deputy emergency agency chief, said evacuees who did't have relatives to stay with were being housed in junior college dormitories away from the anticipated disaster area.
Flights from New Orleans and other Gulf Coast cities were cancelled on Monday as the storm bore down on the region.
Residents boarded up the windows of their shops and homes before leaving town, while others hunkered down as "hold-outs" with stockpiled food, water and shotguns to ward off looters.