Typhoon Bavi is expected to pass very close to Japan's Sakishima Islands, a remote island chain near Taiwan that is part of Okinawa Prefecture, early on Saturday morning, according to meteorological authorities.
Maximum sustained winds were topping out at 162km/h, and residents on Ishigaki, one of the islands in the chain, were taping up windows and draping windproof nets across homes and shops.
Airlines grounded dozens of flights in the region.
Japan Airlines said it had cancelled more than 100 flights for Friday and Saturday, affecting nearly 20,000 passengers.
Rival carrier All Nippon Airways cancelled more than 160 flights through Sunday, disrupting travel for roughly 20,000 people.
Nearly 900 buildings in Okinawa Prefecture were without power on Friday.
On Ishigaki, a popular tourist destination, residents stocked up on supplies, emptying shelves of instant noodles at a local supermarket.
Some public beaches, coastal parks and the local ferry terminal appeared closed.
In neighbouring Taiwan, financial markets closed for the day, with a large swathe of the north and east also off work.
The Taipei city government set up stations for residents to collect sandbags.
Bavi is not expected to make landfall in Taiwan but will dump huge amounts of rain on the island - some areas could get up to one metre of rain starting late on Friday.
The government said more than 1000 people have been evacuated, mainly from the mountainous eastern coast, and nearly 29,000 military personnel were on standby to help relief efforts.
"Although the typhoon has weakened slightly and has been downgraded to a moderate typhoon, its storm radius is large and it may still bring strong winds and heavy rain to many areas," Taiwan President Lai Ching-te wrote on his Facebook page.
Taiwan's airlines have cancelled their flights on Saturday from the main international airport at Taoyuan outside Taipei.
Cathay Pacific Airways, Hong Kong's flagship carrier, also cancelled weekend flights between Hong Kong and Taiwan and some to the eastern Chinese coastal cities of Hangzhou, Ningbo and Fuzhou.
Late on Saturday, Bavi is forecast to cross the coast around the eastern Chinese city of Wenzhou, home to 10 million people.
