The National Hurricane Centre said Arthur made landfall around 0845 IST today over the Shackleford Banks between Cape Lookout and Beaufort.
Just before it made landfall, Hurricane Arthur strengthened into a potentially destructive category-two storm.
The first storm of the Atlantic hurricane season was packing maximum winds of 100 miles (160 kilometres) per hour, forecasters said, warning North Carolina - home to many popular holiday destinations - would bear the brunt of Arthur's fury.
Heavy rain and strong winds lashed the North Carolina coast.
The storms is expected to churn up the coast and threaten areas as far north as Nova Scotia in Canada.
After ratcheting the hurricane up a grade, the National Hurricane Centre predicted there would be "little change in strength," and that the storm would fizzle out to a post-tropical cyclone tomorrow.
But in the meantime thousands of people were already without power in North Carolina, news reports said, and there was localised flooding in areas including the coastal city of Wilmington.
Emergency declarations were issued by several counties in the southern state, which opened emergency shelters and ordered evacuations in low-lying areas.
"As the hurricane moves north, more counties are likely to declare a state of emergency," McCrory added.
National Hurricane Centre forecasters warned of "large and damaging waves" and cautioned: "Preparations to protect life and property should have already been completed."
McCrory urged residents and tourists to use common sense, to stay out of the water and out of harm's way, with storm surges of up to five feet (1.5 meters) predicted.
"Don't put your 'stupid hat' on," McCrory said.
"Let's hope for the best, pray for the best, that Arthur clears out quickly so we can all get back to celebrating our country's independence, with our families and friends on North Carolina's beautiful beaches.
