The Calbuco volcano in southern Chile has erupted for the first time in more than four decades, sending a plume of smoke and ash several kilometres high.
Emergency services declared a red alert and about 1,500 people were evacuated from a 20km (12 mile) radius as a precaution, authorities said.
The nearby city of Puerto Montt has already been blanketed in a cloud of ash.
Mayor Gervoy Paredes said residents were "very, very frightened".
Neighbouring Argentina also put emergency measures in place for the city of Bariloche - about 100km from Calbuco - where ash clouds were expected.
Residents there have been warned to stay indoors.
Authorities said no hot rocks or lava had been seen so far, only ash. However, experts warned that local rivers could be flooded by melting snow and ice.
Alejandro Verges, a local emergency director, told the Associated Press that the eruption came as a surprise. Calbuco last erupted in 1972.
TV footage showed traffic jams in Puerto Montt and long queues at petrol stations. The nearby town of Puerto Varas was also under a state of alert.
Interior Minister Rodrigo Penailillo called on people affected to "remain calm and stay informed".
"The police have given orders and begun to evacuate," he said.
Chile has the second largest chain of volcanoes in the world after Indonesia, with about 500 that are potentially active.
It is southern Chile's second volcanic eruption in as many months. In March, the Villarrica volcano erupted in the early hours of the morning, spewing ash and lava.