A satellite image from the U.S. National Oceanic and Atmospheric Administration shows tropical storm Dolly tracking toward the coasts of Mexico and Texas. (NOAA)

Parts of Mexico and Texas made emergency preparations Tuesday as Hurricane Dolly, upgraded Tuesday evening from a tropical storm, headed toward landfall along the coast of the Gulf of Mexico.

The U.S. National Hurricane Center said Dolly was 270 km off the east coast of Mexico at 5 p.m. Tuesday, creeping northwest and projected to hit shore near the U.S. border early Wednesday. The storm was whipping up sustained winds of 120 km/h and moving at around 16 km/h.

Dolly could dump up to 500 millimetres of rain on northeast Mexico and southeast Texas, the hurricane centre said. Coastal tide levels are forecast to rise up to two metres, and dangerous waves will batter shorelines.

The northeastern Mexican state of Tamaulipas prepared to evacuate residents from a 300-kilometre span of coastline, while the neighbouring state of Nuevo Leon was setting up 300 emergency shelters.

Texas Gov. Rick Perry mobilized 1,200 National Guard troops, and residents along the Gulf Coast near the Mexican border were buying plywood, flashlights and other supplies to brace for the storm.

Even as far up the coast as the Houston area, officials told residents to be ready in case the storm changes course and heads their way.

Texas officials said they wouldn't order evacuations along the coast unless Dolly strengthens to a Category 3 hurricane, with sustained winds of at least 178 km/h.

Storm kills 3 in Mexico

Dolly crossed Mexico's Yucatan Peninsula Monday, battering hotels and resorts in the vacation destination of Cancun with heavy rains and winds but without causing major damage there.

However, torrential rains from the storm left three people dead on Monday: one in the northern state of Chihuahua and two tourists at a beach in the southwestern state of Guerrero, according to Mexico's El Universal newspaper.

The Gulf of Mexico is home to several major oil platforms, but Dolly's projected route will take it south and west of the most important petroleum areas.

The United States has had only one Atlantic hurricane strike its coasts in the last two seasons, Humberto in 2007. But before that, two disastrous years in 2004 and 2005 saw a spate of storms devastate the Gulf Coast, including Hurricane Katrina in August 2005.