Prime Minister Charlot Salwai told Radio New Zealand that Cyclone Lola cut communications with Penama province, which consists of three major islands, making it hard to know the extent of the devastation.
However, reports from the region say severe damage was done to buildings and agriculture in the province, which is home to about 30,000 people.
Lola had been classified as a Category 5 storm as it moved toward the archipelago on Tuesday, but was later downgraded to Category 3 by Wednesday afternoon.
However, "destructive" wind speeds of 125km/h and gusts of up to 185km/h were still lashing the islands, the Vanuatu Meteorology and Geo-Hazard Department said.
Very rough seas and heavy swells are expected in all Vanuatu waters as Lola moves away, it added.
Air Vanuatu cancelled all flights and ships were recalled to ports.
The capital Port Vila on the island of Efate was also on red alert, and government buildings, markets and banks remained closed until further notice.
Between November and April, Vanuatu is regularly affected by cyclones. However, Lola came unusually early and is the first pre-season cyclone in the South Pacific since 1970.
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