The hurricane is expected to grow fierce before it makes landfall on Thursday. Otto will bring rains which may result in "life-threatening flash floods and mud slides."
Three people have been killed in Panama by severe weather caused by Hurricane Otto which is barreling towards Central America.
The storm is expected to strengthen in the Caribbean before it hits Costa Rica and southern Nicaragua on Thursday, prompting evacuations.
Otto's rains "will likely result in life-threatening flash floods and mud slides," said the National Hurricane Centre.
"Life-threatening surf and rip-current conditions" will be experienced along the coasts of Panama, Costa Rica and Nicaragua, the Miami-based centre warned.
Otto, which has turned into the seventh hurricane of the 2016 Atlantic hurricane season, is currently packing maximum sustained winds of 120 km/h.
In Panama, two people died from a mudslide and a boy was killed by a falling tree at the onset of Otto's heavy rain, the head of the National Civil Protection Service, Jose Donderis, said.
The boy was hit by a tree that fell on the car he was in while waiting with his mother outside his school in the capital, Donderis said. The mother survived.
Officials in the country ordered all schools closed. Government workers were told to leave offices hours early on Wednesday.
Neighbouring Costa Rica on Tuesday ordered the evacuation of more than 4,000 people along the sparsely inhabited northern part of its Caribbean coast to avoid fatalities.
Nicaragua, the poorest country in Central America, has issued a national alert and also ordered coastal evacuations.
The storm was expected to pass near Managua, Nicaragua's inland capital, on Thursday.
According to forecasts, Otto was to cut across the narrow strip of land that lies between the Caribbean Sea and the Pacific Ocean, before losing strength and dying out into the Pacific Ocean on Friday.
A previous hurricane, Matthew, devastated parts of southern Haiti in early October, killing 546 people and leaving nearly 175,000 homeless.