The surprise eruptions prompted officials to declare a state of emergency, send in the army and evacuate a 21-kilometer (13-mile) radius around the volcano, which last erupted in 1961 and had not shown any signs of increased activity.
There were no immediate reports of injuries, but a 21-year old mountain climber has been reported missing.
The eruptions sowed panic in the nearby port city of Puerto Montt, a tourist gateway to the popular Patagonia region whose mayor said residents were "very, very frightened," amid warnings that melting snow and ice could flood rivers.
The first eruption, which started around 6:00 pm (2100 GMT) Wednesday and lasted about 90 minutes, spewed a giant mushroom cloud of ash 10 kilometers into the sky, which turned hues of pink and yellow as the sun set over the area.
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Seven hours later, the volcano erupted again, this time shooting lava into the air and generating volcanic lightning, a phenomenon researchers believe is caused by the emission of large amounts of volcanic material charged with static electricity.
Chile's National Geology and Mining Service warned a third eruption was likely over the next few hours.
On a 0-8 scale measuring volcano eruption strength, the first one came in at four or five, the interior ministry said.
The second was more powerful still, said the National Geology and Mines Service.
President Michelle Bachelet said she would travel to the affected area Thursday along with several ministers.
"The ash might damage crops, animal feed, bridges, roads, people's work routines, tourism and especially their health," she said.
Until minutes before the blast, volcano eruption monitoring systems had picked up nothing. In fact, volcano watchers in Chile had been watching another one, Villarica, for a possible eruption.