Photographs showed lava flows and ash covering about one-fourth of Cerro Negro's northern face soon after the eruption began about 4 p.m. local time.
The flows appeared to have reached the base of the volcano and a plume of vapor rose from the crater.
Cerro Negro is one of Nicaragua's youngest and most active volcanos.The largest town of any size, Malpaisillo, is 7 1/2 miles away. There were no immediate reports of damage or casualties. There are villages on the peak's southern face but apparently none on its northern side.
The volcano last erupted in November 1995, showering volcanic ash on communities as far away as Leon, 56 miles to the west.
The eruption was discovered by experts from Nicaragua's Institute of Earth Studies, as they traveled by helicopter to investigate the mudslide at the nearby Casitas volcano.
In that tragedy, a crater lake overflowed, sending mud and rock hurtling down a volcano on to villages below.
President Arnoldo Aleman Monday declared three days of national mourning for what he said was the country's worst natural disaster since a magnitude-6.2 earthquake killed five thousand people in 1972.