Hurricane Ida has weakened to a tropical storm as it makes its way across Nicaragua, the U.S. National Hurricane Center said.

The storm ripped into Nicaragua's Atlantic coast on Thursday morning after forcing more than 2,000 people to flee their homes and knocking out power to some parts of the impoverished region.

The storm is expected to move across Honduras before emerging over open water on Saturday — a still-tentative path that could carry it near Mexico's resort of Cancun by midweek.

The hurricane struck land about 125 kilometres north of Bluefields with winds of 120 km/h, according to the U.S. National Hurricane Center.

The storm could dump as much as 500 millimetres of rain as it crosses eastern Nicaragua, with the risk of flash floods and mudslides, according to the Miami-based centre.

There were no immediate reports of deaths, but Nicaragua's national civil defence director Mario Perez said more than 2,000 people had been evacuated from the area — 800 of those from flimsy, makeshift homes on Corn Island and nearby Little Corn Island, where strong winds damaged about 45 homes, toppled trees and knocked out power.

About 2,500 people live on the two islands, which are popular tourist destinations.

"There is no electricity on the island and telephone is out and there is little water," Perez said.

Nicaragua issued a hurricane warning for the coast from Bluefields to Puerto Cabezas.