Lady Elliot and Heron Islands, off the coast of Gladstone, are being evacuated as a precaution, and the same is happening on Fraser Island.
Forecasters say the Category 4 cyclone - which intensified to a Category 5 storm last night but has since been downgraded - is as destructive as Larry, which caused billion-dollar destruction in 2006.
For the first time in many years, a cyclone warning has been extended south to Bundaberg, with a cyclone watch through to Tewantin on the Sunshine Coast.
Hamish is about 175 kilometres north-east of Mackay and 335 kilometres north of Yeppoon, moving south-south-east at 19 kilometres per hour.
Queensland Premier Anna Bligh convened a state disaster management meeting this morning.
She was considering suspending the state election campaign but now says that will not happen at this stage.
"The movement of campers has already started on Fraser Island," Ms Bligh said.
"That is a large exercise but I'm advised by the Fraser Coast local disaster management group that they have that evacuation under control and it will proceed throughout the day."
Ms Bligh says the army is on stand-by due to Hamish, which is forecast to bring strong gusts, rising sea levels and huge waves.
"I've spoken personally with the Prime Minister, who also is ready to deploy the army at very short notice," she said.
Heading to Hervey
Weather forecaster Jim Davidson says Hamish is tracking slowly towards the Hervey Bay region.
"We're not actually thinking that it will cross the coast, but a possibility is it might move in into the general direction of Hervey Bay, now which side of Fraser Island it goes is a ... matter of debate," he said.
"If it should go to the west of Fraser Island, yes it will be a very serious concern for people between about Bundaberg and Double Island Point."
Hamish developed into a category 5 cyclone overnight, threatening the Whitsundays, where several resorts were evacuated and others locked down.
The destructive winds and large seas prompted the evacuation of South Molle and Long Island resorts.
Hayman and Hamilton islands are in lockdown and the Mackay and Hamilton Island airports are closed.
Resort management at Hayman Island says there has been no damage on the island yet and all guests and staff are safe.
Whitsunday regional mayor Mike Brunker says the cyclone has not yet caused any major damage.
"It was a decent blow, but nothing out of the ordinary for coastal residents," he said.
Meanwhile, police tape has been strung out across the roadway to the rockwall at the Mackay Harbour and SES officers are guarding the site after reports of people walking around the 'road closed' sign and onto the breakwater.
Car loads of people are continuing to file down to the area to see Hamish's impact first-hand.
Marina resident Cheryl says she is concerned about her home being affected later this afternoon.
"I haven't been in a bad cyclone like this before," she said.
"To actually be here on the water with it, it's a little bit daunting."
- Australian Broadcasting Corporation
- © ABC