The centre of former Hurricane Sandy has made landfall along the New Jersey coast near Atlantic City, forecasters said.
The National Hurricane Centre said the storm packing torrential rains and wind roared ashore at about 8pm EDT Monday (0000 GMT).
Millions of people across the north-eastern United States are bracing themselves for the arrival of the storm.
The storm flooded shore towns and threatened to cripple Wall Street and New York City's subway system with a huge surge of corrosive seawater.
Forecasters warned it would combine with two other weather systems - a wintry storm from the west and cold air rushing in from the Arctic - to create an epic superstorm.
From Washington to Boston, subways, buses, trains and schools were shut down and more than 7,000 flights grounded across the region of 50 million people. Hundreds of thousands of people were under orders to move to higher ground to await the storm's fury.
President Barack Obama and Republican challenger Mitt Romney suspended their campaigning with just over a week to go before Election Day. At the White House, Mr Obama made a direct appeal to those in harm's way: "Please listen to what your state and local officials are saying. When they tell you to evacuate, you need to evacuate. Don't delay, don't pause, don't question the instructions that are being given, because this is a powerful storm."
The storm washed away a section of the Atlantic City Boardwalk in New Jersey. Water was splashing over the seawalls at the southern tip of Manhattan.
A construction crane atop a luxury high-rise in midtown Manhattan collapsed in high winds and dangled precariously. Residents in surrounding buildings were ordered to move to lower floors and the streets below were cleared, but there were no immediate reports of injuries.
The major American stock exchanges closed for the day, the first unplanned shutdown since the September 11 attacks in 2001. Wall Street expected to remain closed on Tuesday. The United Nations cancelled all meetings at its New York headquarters.