Volcanic ash is sent in the skies as the volcano emitted a thick plume of smoke reaching 13,100 feet.
It is the second major emission from the Indonesian island volcano this week, and flights have been disrupted.
The red warning means an eruption is forecast to be imminent, with significant emission of ash likely.
Authorities have begun distributing masks in areas amid ash fall.
Bali is a major tourist destination, although the main destinations of Kuta and Seminyak are about 43 miles from the volcano.
Its main airport is for now operating normally, but some airlines have canceled flights. Volcanic ash can damage plane engines.
On the island of Lombok just east of Bali, the main international airport has been closed entirely.
The information director of Indonesia’s Disaster Mitigation Agency tweeted that volcanic ash rain had fallen on the Lombok city of Mataram.
The agency said in a statement: “Tourism in Bali is still safe, except in the danger (zone) around Mount Agung.”
It told people within a 5 miles exclusion zone to “immediately evacuate” in an “orderly and calm manner”.
About 25,000 people are thought to still be in temporary shelters after more than 140,000 people fled earlier this year. Increased volcanic activity had prompted fears a major eruption was imminent.
Most of the population outside the immediate exclusion zone was ordered to return home at the end of September, and the mountain has been intermittently rumbling since.
According to official estimates, Bali lost at least $110 million in tourism and productivity during the major evacuation.
Indonesia sits on the Pacific “Ring of Fire” where tectonic plates collide, causing frequent seismic and volcanic activity.
It is home to more than 130 active volcanoes. The last time Mount Agung erupted, in 1963, more than 1,000 people died.
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