Hurricane Irene weakened to a tropical storm as it moved through New Jersey and New York but fear of flooding in many areas still loomed large as river water began inundating some of Manhattan's streets.
Irene made landfall on the New Jersey coast early Sunday morning after heavy rains and winds battered the city throughout the night.
It moved to the New York City area, though it had weakened to a tropical storm by then.
City officials expressed some sense of relief, saying the situation had not got out of control.
"Things look better than we anticipated," Office of Emergency Management spokesman Christopher Gilbride said.
"The storm seems less organised, and the storm is moving quicker than we thought," he said adding that a quicker moving Irene would move pass the area also and could cause less damage.
New York had prepared for the worst and hoped for the best as it took unprecedented measures to ensure damage caused by Irene is minimised.
It completely shut down its entire mass transit system, evacuated hundreds of thousands of residents and deployed military personnel under its emergency response plans.
Millions of people in Irene's path in New Jersey, New York and Connecticut were left without power.
Post-Irene, a storm surge of about four feet is expected in the waters. A storm surge of 3.8 feet was reported at New York Harbour.
Moderate-level flooding was reported at Battery Park City in lower Manhattan, the hurricane center said.
"At noon, the most intense part of the storm would be past us," Caswell Holloway, the city's deputy mayor for operations, said at an early morning briefing. "We're in the window that is the most dangerous," he said.