Fountains of high lava burst from the Mount Nyiragongo into the night sky forming a thick orange cloud over Goma, which has a population of two million.
Thousands of panic-stricken residents were fleeing, many on foot.
The volcano, located 10km (six miles) from Goma, last erupted in 2002 killing 250 people and making 120,000 homeless.
Crowds were seen with mattresses and other belongings, fleeing towards the border with Rwanda to the east, even before the government’s announcement, which came several hours after the eruption started.
Rwandan authorities said about 3,000 people already had officially crossed from Goma. The country’s state media said they would be accommodated in schools and places of worship. Other residents fled to higher grounds to the west of the city.
“We’re already in a total psychosis,” resident Zacharie Paluku told the Associated Press (AP) news agency. “Everyone is afraid; people are running away. We really don’t know what to do.”
A new fracture opened up on the volcano, enabling lava to flow south towards Goma and reach the airport, on the eastern edge of the city. Electricity was out across large areas, and one highway that connects Goma with the city of Beni had already been engulfed by the lava.
“There is a smell of sulphur. In the distance you can see giant flames coming out of the mountain,” resident Carine Mbala told AFP news agency.
An official from Virunga National Park, where the volcano is located, said in a note to staff that the eruption was similar to the one in 2002 and that everyone near the airport should “evacuate without delay”.
Earlier, Communications Minister Patrick Muyay said on Twitter that the government was discussing “urgent measures” after the prime minister convened an emergency meeting in the capital, Kinshasa.
People have been advised to stay calm, but some complained about the lack of information from the authorities amid conflicting accounts circulating on social media.
The UN peacekeeping mission in the country, Monusco, said it was carrying out reconnaissance flights over the city.