The storm could be one of the worst in decades, with gusts of up to 270 kilometres per hour expected to slam into the southernmost subtropical island chain early tomorrow, and possibly reaching mainland Japan by Wednesday, the national weather agency said.
The typhoon was located some 600 kilometres south of Okinawa's main island at 0300 GMT and was moving north northwest at 25 kilometres per hour.
The official warned that the storm could pack "record level" winds and stir up high waves.
"It is likely to arrive in Okinawa Tuesday morning, generating violent gales and high waves... And, in some areas, violent rains," he said.
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"Please be ready to evacuate," the official added.
The meteorological agency forecast Neoguri, whose name means racoon in Korean, would dump up to 80 millimetres of rain an hour on Okinawa as it pounds the archipelago.
The storm, which could affect an area with a 500 kilometre radius, was expected to be downgraded by the time it hit the Japanese mainland.
"I'm calling on the heads of municipalities not to hesitate in issuing evacuation warnings and don't be afraid of being overcautious," Keiji Furuya, the state minister in charge of disaster management, told a government meeting.
The US Kadena Air Force base in Okinawa, the largest US airbase in the Pacific, began evacuating some of its aircraft yesterday in preparation for the typhoon.
"I can't stress enough how dangerous this typhoon may be when it hits Okinawa," Commander James Hecker of the 18th Wing stationed in Kadena said in a statement posted online.
"So be prepared!...Tie down your outdoor items and work with your neighbours to help them."
"During the typhoon, do not go outside... Anything not tied down, even small items, could become deadly projectiles," the statement said.
Okinawa is regularly hit by typhoons but islanders were taking no chances with fishermen on Miyako island bringing boats back to port and tying them down with ropes.
"It's rare that we brace for a typhoon (as early as) July," a Miyako fisherman said in television footage from public broadcaster NHK.