Flash floods and strong winds have hit Tuvalu, Kiribati and the Solomon Islands, causing significant damage.
Vanuatu has issued a red alert nationwide.
Cyclone Pam has reached its north and was expected to felt in the capital, Port Vila, on Friday night.
There have been no casualties or loss of life reported yet.
Meanwhile, category three Cyclone Olwyn has hit the coast of Western Australia with wind gusts of up to 120mph.
People in the WA coastal region were warned to move to higher ground to escape dangerous flooding.
Cyclone Pam has already caused flash floods in Tuvalu, which has declared a state of emergency.
The storm destroyed homes and flooded crop areas in Kiribati and the Solomon Islands, where at least 3,000 households have been affected.
The Vanuatu Meteorological Services (VMS) said that at 18:00 local time Cyclone Pam was 65 miles north-northeast of Port Vila and packing strong winds of 142mph at its centre.
All six provinces are now under red alert, meaning people are advised to immediately head to shelter.
VMS said “very destructive winds and very rough to phenomenal seas with heavy swells” were already hitting the region, while torrential rainfall, flash flooding, landslides and storm surges were expected.
Vanuatu National Disaster Management Office spokesperson Mishaen Garae Lulu told Radio New Zealand that the government had lost contact with some parts of the northern provinces.
He said the cyclone was expected to be worse than Cyclone Uma which killed 50 people in 1987.
Port Vila, was expected to escape the worst of the cyclone but people were being advised to move away from rivers and the sea.
The Vanuatu country director for Save the Children, Tom Skirrow, told AFP he was concerned about families living in shanty town areas.
“Thousands of families are living in makeshift, flimsy houses which will not withstand the immense winds and rain we’re expecting. Families need to urgently evacuate to safe buildings or the results could be catastrophic.”
Cyclone Pam is expected to weaken as it moves southwards just off the east coast of the island chain, which has a population of about 246,000.
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