The U.S. Geological Survey said the earthquake struck 54 miles from the nearest city, Gorantalo, on Sulawesi island. It was centered 13 miles beneath the sea and was followed by two strong aftershocks.
The Pacific Tsunami Warning Center initially warned the temblor had the potential to generate a destructive tsunami along coasts within 600 miles. But even after local officials lifted the tsunami alert, frightened Sulawesi residents refused to go back indoors.
In December 2004, a massive earthquake off Indonesia's Sumatra island triggered a tsunami that battered much of the Indian Ocean coastline and killed more than 230,000 people - 131,000 of them in Indonesia's Aceh province alone. A tsunami off Java island last year killed nearly 5,000.
By morning, officials were starting to get a better sense of the damage.
Rustam Pakaya, the head of the Health Ministry's Crisis Center, said at least one person died and "a number of houses and schools collapsed."
Robert Bano, a resident in the provincial capital, said the massive quake shook his house for more than two minutes, knocking paintings from the wall. He grabbed his crying children and, along with many others, ran outside.
Some fled to high ground, others gathered in the streets. A few guests streaming from Paradiso Hotel were so afraid they fainted, the official news agency Antara reported. A witness in the city of Poso said patients from at least one hospital were evacuated.
Indonesia is prone to seismic upheaval due to its location on the so-called Pacific "Ring of Fire," an arc of volcanos and fault lines encircling the Pacific Basin.
Associated Press Writer Niniek Karmini and Zakki Hakim contributed to this report from Jakarta.