Sandy could bring winds of up to 70 mph and dump 1 to 4 inches of rain to parts of the Granite State, Gov. John Lynch's office said.
Lynch urged drivers to stay off the state's roads and asked employers to release workers early Monday afternoon to avoid travel after 3 p.m. when high winds and heavy rains were expected to intensify.
"This will be significant storm for New Hampshire, and we are urging all citizens to exercise common sense and extreme caution," Lynch said in a statement after declaring a state of emergency.
The governor asked the National Guard to place 100 troops on active duty, with 100 more on standby.
Two people in Morris County were killed Monday evening when a tree fell on their car, authorities said. A male of unknown age was also killed in Hawthorne when a tree fell on a house, according to Hawthorne Fire Chief Joseph Speranza.
Several feet of water were flooding parts of Atlantic City on Monday, and authorities worked to evacuate hundreds of people from West Atlantic City, where waters were "dangerously high," said Linda Gilmore, a spokeswoman for Atlantic County.
Atlantic City was under curfew from 6 p.m. Monday until 6 a.m. Tuesday.
"When Mother Nature sends her wrath your way, we're at her mercy, and so all we can do is stay prayerful and do the best that we can," Atlantic City Mayor Lorenzo Langford told CNN.
He said the city could get as much of 5 feet of water, and video showed downtown streets looking like rivers.
New Jersey was the first to announce mandatory evacuations. The state's barrier islands from Sandy Hook south to Cape May were ordered to clear out, along with Atlantic City's casinos.
"We're at a moment now where evacuations are no longer possible. And we're no longer able to come and rescue people," Gov. Chris Christie said Monday afternoon.
Addressing those who chose not to evacuate, he said: "We will not be able to come and help you until daylight tomorrow. Please try to hunker down and stay safe until then."
All state offices were closed Monday, with only essential employees expected to report to work, Christie announced. The same will be true Tuesday.
New Jersey Transit came to a halt and will remain suspended indefinitely. Flooding from Sandy also forced the closure of Newark Liberty International and Teterboro airports.
Obama declared a state of emergency in New Jersey, Christie announced Monday.
"We knew that this was going to be a very dangerous storm, and the storm has met our expectations. The worst of the weather has come, and city certainly is feeling the impacts," New York City Mayor Michael Bloomberg said late Monday.
Hundreds of thousands of New Yorkers were without power. A slow surge of water flooded parts of Lower Manhattan, and downed trees littered the city, sparking fires, the mayor said.
"These are not games. We've said from the very beginning, this is a once in a longtime storm," he said.
At least five people were killed in New York because of Sandy, said Rich Azzopardi, a spokesman for New York Gov. Andrew Cuomo. One of the victims died when a tree fell on his home in Queens.
New York City's ubiquitous public transit system shut down ahead of Sandy's landfall, leaving iconic sites such as Grand Central Terminal and Penn Station empty.
Flooding was confirmed inside subway stations in Lower Manhattan, MTA spokesman Kevin Ortiz said late Monday. As for possible damage, "It's too early to tell," he said.
Energy company Con Edison shut off power to parts of Lower Manhattan and Brooklyn. Seawater from the storm surge threatened to flood the underground system.
Flooding also forced the closure of two major airports, John F. Kennedy and LaGuardia. The runway intersection at the latter was covered by water.
Mandatory evacuations are in place for parts of the city. Evacuation centers have been opened in 76 locations, and schools were closed Monday.
Offices at the United Nations in Manhattan also were closed Monday. So was the New York Stock Exchange, which officials said would also be closed on Tuesday.
The Broadway League canceled all Broadway performances Monday and Tuesday night. Instead of tourists and theater fans, piles of sandbags lined Broadway.
Meanwhile, a crane atop a luxury Manhattan skyscraper under construction partly collapsed Monday, leaving its arm precariously perched and hanging over West 57th Street. New York City is experiencing strong winds because of Sandy, and the property group managing the site blamed the collapse on the storm.
Ahead of possible flooding, New York officials closed various bridges and tunnels, including two key traffic arteries Monday: the Hugh L. Carey and Holland tunnels, which connect Manhattan with Brooklyn and Jersey City, New Jersey, respectively. They also announced the closure of the Tappan Zee Bridge, which stretches across the Hudson River about 25 miles north of New York City.
Gov. Cuomo directed 2,000 troops to mobilize for Sandy, and Obama has declared a state of emergency for New York.
Crew members of a tall ship used for classic adventure films faced a harrowing real-life drama Monday as Hurricane Sandy forced them to abandon ship about 90 miles off Cape Hatteras, North Carolina.
Fighting waves towering 18 feet high and winds of 40 mph, a group from the HMS Bounty boarded two lifeboats, the Coast Guard said. Two helicopter crews saved 14 people stranded in the Atlantic Ocean.
A deckhand missing from the ship was found dead, the Coast Guard said. The ship's captain remains missing.
Strong winds and rain that fell sideways lashed the Outer Banks as the outskirts of Sandy pummeled the barrier islands.
Forecast expect between 4 and 7 inches of rain to fall over several days in the Outer Banks, with some spots receiving eight or more inches.
North Carolina Gov. Beverly Perdue has declared a state of emergency for 24 counties in the western part of her state due to snow.
Gov. Tom Corbett declared a statewide disaster emergency ahead of the storm.