The massive weather system was hovering over the Barkly District, about 100km southeast of Tennant Creek, the Bureau of Meteorology said on Monday.
Intense rainfall, with 24-hour totals up to 350mm, and life-threatening flash flooding are possible southeast of the town of about 3000 people, the bureau warns.
A section of the Stuart Highway, linking the Top End to Alice Springs and South Australia, has been closed south of Tennant Creek.
A severe weather warning has been issued and damaging wind gusts with peaks in excess of 90 km/h are forecast east of Tennant Creek.
Significant flooding is also expected in the Bonaparte Coastal Rivers, North West Coastal Rivers and inland catchment areas over the next three days.
Residents are warned some communities and homesteads may become or remain isolated as water levels rise in creeks and low-lying areas.
The Indigenous community of Ali Curung Bore, 170km south of Tennant Creek, received 85mm of rain on Christmas Day.
Upper Townsend Creek recorded 193mm of rain a day earlier and 166mm fell at Armstrong River during the same 24-hour period.
The Victoria Highway, east of Katherine, also remains closed from the Buntine Highway intersection to the Western Australian border.
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