The Villarica volcano in southern Chile erupted in the early hours of Tuesday morning, spewing ash and lava up to 1,000m (3,300ft) into the air.
Officials declared a red alert and started evacuating people living in the vicinity of the volcano.
The mayor of the nearby town of Pucon said residents were leaving "calmly".
The 2840m-high Villarica is an active volcano with a lava lake in its crater. It is popular destination for hikers.
Chilean officials had issued an alert after they detected increased activity in the crater on Monday According to Chile's Ministry of Mining its last major eruption was in 1985.
More than 100 people are thought to have died in mudflows on the slopes of the volcano during the 20th Century.
Chilean police said the towns of Pucon and Conaripe would be evacuated as a precaution.
Pucon Mayor Carlos Parra said that after 20 minutes, the volcano's activity seemed to have calmed down again.
"There's no ash, no lava flow, the volcano is totally passive at the moment," he said.
Chile's Villarica volcano erupts
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