The magnitude 7.5 quake was at a depth of 21 km, with its epicentre 136 km (84 miles) northwest of the provincial capital of Gorontalo, the U.S. Geological Survey said.
Two further weaker aftershocks struck in the same area of the Celebes Sea bordering the southern Philippines.
Indonesia's meteorological agency issued a tsunami warning after the first quake, but later lifted it.
There were no immediate reports of casualties, but a telephone operator in Gorontalo said the quake could be felt strongly in the city.
"It felt quite big and caused panic," the operator told Reuters, adding that the telephone network had been disrupted.
In the town of Poso in central Sulawesi, residents rushed out of their houses and patients were evacuated from a hospital, Metro TV reported.
Residents also fled to higher ground in the Buol area of central Sulawesi after the quake, according to Elshinta radio.
"We are not expecting anything dangerous but geologists are still monitoring the possible impact," said an official at the Philippine Institute of Vulcanology and Seismology, the country's main earthquake watching agency.
Indonesia launched a new hi-tech system on Tuesday aimed at detecting a potential tsunami and providing faster alerts in a region battered by frequent earthquakes, though experts say large parts of the country are still not covered and the system will not be fully operational until 2010.
The sprawling archipelago of some 17,000 islands, which lies in the seismically-active "Pacific Ring of Fire", was hit by a devastating tsunami four years ago that left an estimated 170,000 people dead or missing in Aceh province.
(Reporting by Telly Nathalia, Additional reporting by Raju Gopalakrishnan in Manila; Writing by Ed Davies; Editing by Janet Lawrence)
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