Sydney's Manly Dam is being monitored closely as water begins to flow over the wall but residents are being urged to stay calm.
There is no risk to public safety, SES deputy commissioner Steven Pearce says.
"The dam is spilling but it's designed to spill. The dam is at no risk of collapse," he told Sky News on Wednesday.
He said evacuation alerts, warning people they may have to prepare to move, would be rescinded later in the day.
"There is no risk to the public."
Emergency services door-knocked low-lying homes on Tuesday night telling residents an evacuation warning had been issued, a police spokesman said on Wednesday.
The tide is due to come in again at 11am on Wednesday.
Residents are being urged to follow the directions of the SES, stay calm and remain at home.
A large quantity of water is flowing over the dam wall, which is usually dry, footage from Seven Network shows.
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