The Nicaraguan government says about 3000 people are being evacuated from areas near the San Cristobal volcano, which is shooting ash high into the atmosphere.
Soldiers have been sent to the region northwest of the capital, Managua, after the government ordered the evacuation of local communities.
The volcano began erupting on Saturday morning, shortly after powerful explosions were heard.
The authorities say they expect more gas emissions and sporadic explosions.
Some 20,000 people could eventually be affected, said a government spokesperson.
The 1745 metre volcano is the highest mountain in Nicaragua and one of the most active along the Pacific Coast of Nicaragua.
It has launched a 4km-high column of ash and smoke into the atmosphere.