The top-level warning means a threat to life, as well as the risk of storm surges, landslides and massive damage from the typhoon packing gusts of up to 250 kilometres (155 miles) per hour.
The Japan Meteorological Agency on late Monday issued the alert for Okinawa's main island, home to around 1.2 million people, as well as the outlying Miyako islands.
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About 6,500 Okinawan households had no power early Tuesday.
The storm comes less than a year after typhoon Haiyan, packing the strongest winds ever recorded on land, killed or left missing more than 7,300 people as it tore across the central Philippines in November.
"There are fears about violent winds, high waves and tides and torrential rain that we have never experienced before," Satoshi Ebihara, the Japanese weather agency's chief forecaster, told an evening news conference yesterday.
"We are in an abnormal situation where serious danger is imminent," he said, advising Okinawans to stay in secure buildings or seek out a safer location if they fear their homes could not withstand the powerful storm.
The Kadena Air Force Base, the biggest US Air Force base in the Pacific, located on Okinawa's main island, has evacuated some of its aircraft as officers stressed that Neoguri may be deadly.
Authorities have now urged about 480,000 people across Okinawa to take shelter in their homes or evacuate to facilities such as community centres and town halls.
"The rain is becoming heavier as the typhoon approaches," a municipal official of Nanjo told AFP by telephone.
"We have urged residents to evacuate when they see any danger."
The typhoon, which has been downgraded from super typhoon status, was about 90 kilometres (56 miles) northeast of Miyako Island as of 0630 IST, according to the weather agency.
The storm was moving north at about 20 kilometres (12.4 miles) per hour, it said.
The storm could reach the southern main island of Kyushu as early as tomorrow, with the weather agency warning that the amount of rainfall by today could reach as much as 400 millimetres (16 inches), posing a serious risk of landslides and flooding.
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