The Villarrica volcano erupted around 3 a.m. local time, according to the National Emergency Office, which issued a red alert and ordered evacuations. Local media showed images of the volcano bursting at the top, glowing in the dark amid heavy smoke and rivers of lava. Authorities worried that mudslides caused by melting snow could endanger nearby communities.
Chilean authorities had issued an orange alert on Monday because of increased activity at the volcano. About 3,500 people have been evacuated so far, including tourists, said Interior and Security Minister Rodrigo Penailillo.
Penailillo warned that the eruption was causing numerous rivers in the area to rise as snow along the sides of the volcano began melting. Villarrica is covered by a glacier cap covering some 40 square kilometers (15 square miles) and snow from about 1,500 meters (about 5,000 feet) on up.
Authorities were keeping an eye on four nearby communities that could be endangered by mudslides as the snow melts. Officials were also monitoring nearly 200 people who were cut off from main roads when two bridges were destroyed by rising waters from nearby rivers.
President Michelle Bachelet arrived in Pucon amid cheers and boos later Tuesday to check on safety preparations, and declared an agricultural emergency to help local farmers.
"You never know when an eruption will take place but what we do know is that the activity is lower, that's visible," Bachelet said after flying over the affected areas and meeting local authorities.
Jose Manuel Reyes, the 37-year-old manager of La Bicicleta hostal in downtown Pucon, said visitors from France, Canada, Australian, South Africa and Brazil watched the early morning eruption from the building's terrace.
"We're still a bit nervous because we don't know what's happening," said Reyes. "There was nervousness, but we haven't seen any panic."
Tourists flock to the area around Villarrica for outdoor activities like kayaking, horseback riding, fishing and hiking around the volcano, which last had a major eruption in 1984. Dozens of tourists were among those evacuated.
The Villarrica has a crater of about 200 meters (yards) in diameter and a lake of lava about 150 meters (yards) deep. It has periodic eruptions every 10 or 15 years.
Chile has more than 2,000 volcanoes in the Andes cordillera and about 90 of them remain active. Villarrica is considered among the country's most dangerous.