Paula formed Monday off the coast of Honduras and quickly intensified into a hurricane early Tuesday, said the National Hurricane Center in Miami.
Heavy rains and high winds destroyed 19 homes in northeastern Honduras, said Lisandro Rosales, head of Honduras' emergency agency. Officials closed schools along the country's Atlantic coast and some airports were reported closed.
Around dawn Tuesday, it had winds of 75 mph (120 kph) and was centered about 190 miles (310 kilometers) south-southeast of the resort island of Cozumel in Mexico.
Paula was moving toward the northwest at nearly 10 mph (17 kph), bringing it near the coast of Mexico's Yucatan Peninsula Tuesday night. The forecast track would have the storm a little offshore of Cancun, Cozumel and Isla Mujeres near the tip of the Peninsula late Wednesday night.
The Hurricane Center said the storm was likely to gain force, though it was not expected to become a major hurricane.
Paula was expected to dump from 3 to 6 inches (8 to 15 centimeters) of Honduras, northern Belize, eastern portions of the Yucatan Peninsula of Mexico and parts of western and central Cuba.
The government of Mexico issued a hurricane warning for the country's Caribbean coast from Punta Gruesa north to Cabo Catoche, including the island of Cozumel. Warnings are issued when hurricane conditions are almost certain to occur.
Forecasters warned of possible flooding and landslides and suggested residents avoid fishing trips or water sports.
Forecasters said the storm would produce heavy rains that could cause flash floods and mudslides, especially in the mountains of Nicaragua and Honduras. It said isolated, mountainous areas in Honduras could get as many as 10 inches (25 centimeters) of rain.
Coastal flooding from heavy waves was also expected along the eastern coast of the Mexican Yucatan Peninsula.