Tropical Cyclone Megan has dumped huge rains on Groote Eylandt and damaged power and water infrastructure in Arnhem Land.

Megan formed in the Gulf of Carpentaria, near Groote Eylandt, on Saturday afternoon, bringing heavy rainfall and strong wind gusts to the western side of the gulf.

The cyclone strengthened into a category two system on Saturday evening and was forecast to move slowly southwards towards the Carpentaria coast and intensify into a category three cyclone by Sunday evening, the Bureau of Meteorology (BOM) said.

It was forecast to make landfall as a category three cyclone late on Monday or early Tuesday morning between Nathan River and the NT/Queensland Border and quickly weaken as it moves west across the Northern Territory.

A cyclone warning alert is in place from Groote Eylandt to Mornington Island and stretched as far inland as Borroloola, McArthur River Mine and Robinson River, but did not include Ngukurr or Mornington Island itself.

The cyclone was currently sitting to the south-east of Groote Eylandt, with the bureau predicting heavy and intense rainfall to continue along coastal communities.

Alia Stevenson, a long-time resident of Groote Eylandt, which received 431 millimetres of rainfall in the past 24 hours, said her family was up into the early hours of Sunday morning preparing to move into a cyclone shelter.

"It was really windy last night and it was quite frightening," Ms Stevenson said.

"It was a full torrential downpour. It's a mess and it's going to be a lot of work to repair."

To 9am Sunday 680 millimetres of rain had fallen on Groote Eylandt in the previous 48 hours.

Ms Stevenson said trees were down across the island, the wharf had been damaged, water bubbles had formed under roads, the highway was shut, the supermarket was shut, and residents could not move between communities.

She said it was the windiest and wettest storm she had experienced in her 17 years living on Groote Eylandt.

"We could hear cupboards tipping over downstairs and we were just trying to gauge where would be best for safety," Ms Stevenson said.

"We got boots and clothes on [to prepare to leave home] and were waiting for another update, but the BOM said the system was moving south."

Much of the flooding Ms Stevenson had observed had subsided by Sunday morning, she said.

The ABC understands a key jetty on the island was damaged during the storms.

The system was now tracking to move inland through Borroloola, according to the BOM's forecasts.

Some residents in Galiwinku, an island west of Nhulunbuy, had to cart water from a bore pump by bucket after the community's water supply was cut-off early on Friday.

Darcy Mildenhall, a school teacher on the island, said some people were without water and power for 48 hours.

"We lost our power and water on Friday morning and it came back at different times throughout the island," Mr Mildenhall said,

"A lot of people here were out on foot in pretty hairy weather trying to fill up water in any containers they could carry, so it was very difficult for a lot of people, especially people living in overcrowded housing."

He said the storm was intense and took the community by surprise.

"There wasn't really any notice here on Elcho Island. No real preparations were made," he said.

"Throughout the storm, a lot of people in the community were supporting each other and helping each other out.

"The school were really good at delivering water and checking up on people, and things like clearing falling trees."

Doug Caporn, who runs the community's general store, said it had been a tough weekend on the island.

"We had a couple of trees come down on power lines in two different places," Mr Caporn said.

"And unfortunately, it was on both sides of the island. So what's happened is it's taken out the water pumps."

Power and Water said the outage was repaired late yesterday.

On Friday, residents in Gunbalanya, in western Arnhem Land, were evacuated due to rising floodwaters as heavy rainfall hit parts of the Top End.