The U.S. Geological Survey put the quake's preliminary magnitude at 7.5 and said it struck 54 miles (135 kilometers) from Gorantalo, a coastal town on Sulawesi island. It was centered 13 miles (21 kilometers) beneath the sea and was followed by a strong aftershock.
The Pacific Tsunami Warning Center said the quake had the potential to generate a destructive tsunami along coasts within 600 miles (1,000 kilometers) of the epicenter.
But one hour later, Fauzi, an official with Indonesia's geological agency, said the threat had passed. Like many Indonesians, he goes by only one name.
Robert Bano, a resident in Gorantalo, said the quake shook homes for more than two minutes and sent many people fleeing their homes for higher ground, some, like him, with crying children.
Witnesses 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.
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.