The Bureau of Meteorology says Tropical Cyclone Vernon could develop over Friday or Saturday with the potential for it to intensify to a category two or higher.
On Thursday it was located about 255 kilometres west of Darwin with sustained winds of 45 km/h and gusts up to 85 km/h.
BOM NT Manager Shenagh Gamble said there was a degree of uncertainty in current forecasts which suggested the low could track southeast towards Darwin or head southwest towards the Kimberley coast.
"The models are really not agreeing as to where this system will go," she told reporters on Thursday.
"Our analysis though does have the system taking a more southeasterly track towards Darwin.
"We're watching the system very closely today and certainly over the next 24 hours."
Ms Gamble said if the system did cross the coast around Darwin it was expected late on Saturday or possibly Sunday morning.
It was also expected to impact the Tiwi Islands this weekend with winds of more than 120 km/h and isolated falls of up to 300 millimetres each day.
NT Emergency Services regional manager Mark Cunnington said he expected most residents to stay on the islands during the storm.
"There's not necessarily a cause for concern, but if people do plan to evacuate from the islands, now is the time to do it," he said.
"Don't wait until there is heavy weather already appearing. Obviously, ferries and aircraft will stop operating at certain points with heavy weather."
The cyclone watch zone stretched from Point Stuart to Kalumburu and included the Tiwi Islands, Darwin, Wadeye and Wyndham.
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