The National Hurricane Center said the storm was headed west-northwest at 28 miles per hour.
The storm surge is forecasted to be from 4 feet to 8 feet at the southernmost Jersey shore and 6 feet to 10 feet from Atlantic City and points north.
Wind gusts are expected to be 60 to 100 mph across the region, with the heaviest gusts closer to the south Jersey shore.
Atlantic City appeared to be among the hardest hit communities on the shore. A photo from Action News reporter Dann Cuellar showed the boardwalk washed away as the water deluged the town.
Atlantic City will be under a curfew on Monday night through Tuesday morning as Hurricane Sandy hits. No one will be allowed on the streets between 6:00 p.m. Monday and 6:00 a.m. Tuesday.
Gov. Chris Christie says some people are stranded in Atlantic City and he's blaming the mayor. In a news conference on Monday evening, Christie says Mayor Lorenzo Langford erred by allowing people to shelter on the barrier island rather than moving them inland.
He says that rescue operations are being suspended until daylight Tuesday. Anyone left on that island is stuck there and will have to ride it out until Tuesday.
"The city's basically flooded," said Willie Glass, the city's public safety director. "Most of the city is under water."
The same could be said of much of the southern New Jersey shore. The storm surge went over the sea wall in Cape May with high tide early Monday and punched through dunes in other communities. The entire 35-mile stretch of the Garden State Parkway south of Atlantic City was shut down in both directions. Officials reported rescues in Pleasantville.
"It's going to be a slog through the history books but we're doing OK so far," Glass said.
Atlantic City and its casinos were ordered evacuated on Sunday. The city's historic boardwalk remained intact despite the rising floodwaters, though an old section at the north end broke up and washed away.
In Philadelphia, all schools in the city will be closed again on Tuesday.
There will also be no SEPTA service on Tuesday morning. SEPTA officials will monitor the situation through the day and make decisions as the storm progresses.
Mayor Michael Nutter also announced that there will be no trash pickup on Tuesday in Philadelphia. Residents will have to hold onto their trash until next Tuesday.
Sheila Gladden evacuated from her home in Philadelphia's flood-prone Eastwick neighborhood and headed to a hotel, preferring not to take any chances.
"I'm not going through this again," said Gladden, who had five-and-a-half feet of water in her home after Hurricane Floyd in 1999.
"They're telling me this is going to be worse than Floyd because this is some superstorm," she said. "I'm not going back until the water's receded."
Mayor Michael Nutter told Action News early Monday that shelters are open and ready to help those who have to get out.
"If you have not relocated, if you are in one of those areas, the time to go is now, because things are only going to deteriorate as time goes on," Nutter said.
"We're going to all have to hang in there together."
The city remains under a state of emergency until 5:00 p.m. Tuesday.
Mass transit service was shut down, all flights were canceled out of Philadelphia International Airport and Amtrak stopped service.
Meanwhile, the Delaware River Port Authority said bridges were closed to truck traffic at 2:00 p.m. Monday. Those bridges are the Commodore Barry, the Walt Whitman, the Ben Franklin and the Betsy Ross.
Earlier Monday, the Pennsylvania National Guard activated 750 soldiers and expects to have a total of 1,600 placed on active duty to deal with damage caused by Hurricane Sandy.
The National Weather Service issued high wind and flood warnings for much of southeastern Pennsylvania, where winds of up to 75 mph and up to 10 inches of rain were possible.
Officials warned Sandy is a dangerous storm that promises to bring power outages that could last for days and cause rain-swollen waterways to rise over their banks.
Gov. Tom Corbett declared a state of emergency in anticipation of storm damage while utility companies called in reinforcements to deal with what could be massive power outages.
Officials are warning residents of flood-prone areas - like those affected by the remnants of Hurricane Irene last year - to be ready to move.