MANAGUA, Nicaragua (AP) - The U.S. National Hurricane Center said the unusually strong late-season hurricane hit land just north of the Costa Rican border near the town of San Juan de Nicaragua with winds of 110 mph (175 kph).
Heavy rains from the storm have already been blamed for three deaths in Panama.
The center said Otto will continue to move across southern Nicaragua and northern Costa Rica and is expected to weaken to a tropical storm by Thursday night.
In Bluefields, Nicaragua -- the nearest big town on the Nicaraguan coast -- residents prepared to ride out the hurricane.
Further south --and closer to where Otto hit -- residents in the coastal town of Punta Gorda said they were planning to ride out the hurricane.
Nicaragua closed schools and was evacuating more than 10,000 people from communities in the storm's path. Heavy rains were expected to affect the entire country, raising the possibility of flooding and landslides.
By Thursday morning, 16 government shelters in Costa Rica held about 1,335 evacuees. People often take shelter with relatives during such evacuations.
Costa Rican President Luis Guillermo Solis said Otto could damage the country's important coffee and agriculture sectors.
Otto "could seriously jeopardize food security for small-holder farmers who rely on maize, beans, cocoa, honey, coffee and livestock for their livelihoods," said Jennifer Zapata, a regional director for Heifer International, a U.S.-based anti-poverty group.