A pyroclastic flow is a superheated current of gas and rock that can destroy nearly everything in its path and travel at speeds upwards of 200 to 300 kilometers per hour.
LATAM Airlines said it has canceled flights to and from neighboring Puerto Montt, the area's largest city, due to the presence of volcanic ash, which can potentially damage aircraft and make flying dangerous.
Trevor Moffat, who lives in Ensenada, some 10 km from the volcano, said he and his family fled when the volcano erupted. The 2,003-meter-tall Volcano Calbuco saw its last major eruption in 1961.
Read MoreAre volcanoes the energy source of the future?
"It sounded like a big tractor trailer passing by the road, rattling and shaking, guttural rumbling. ... We left everything there, grabbed my kid, my dog, got in the car with my wife," Moffat said.
"All the neighbors were outside, a lot of young people crying. Armageddon type reaction," said Canada-born Moffat, who was driving to nearby Puerto Varas.
Television pictures showed a spectacular mushroom-shaped column billowing into the sky with occasional lighting bolts shooting through. The eruption was seen in towns at least 50 kilometers away.
"There are a lot of people out in the streets, many heading to the gas stations to fill up on gas," Derek Way, a resident of Puerto Varas, said.
"A friend told me to fill everything we have with water," Way added.
Chile, on the Pacific "Rim of Fire," has the second largest chain of volcanoes in the world after Indonesia, including around 500 that are potentially active.
In March, Volcano Villarrica, also in southern Chile, erupted, sending a plume of ash and lava high into the sky, but quickly subsided.