The US National Weather Service has downgraded Iselle from a hurricane to a tropical storm as it moves over the island chain.
Iselle knocked out power on the Big Island and caused high surfs to form off the coast on Thursday.
It was classified as a tropical storm at 11pm local time when its winds slowed to 112 kilometres per hour, putting it below the minimum of 119 kmph for a hurricane.
The storm was moving west at 17 kmph, with its eye still about 80 km south of the town of Hilo, the Hurricane Center said.
As residents and tourists braced for Iselle, a category 3 hurricane dubbed Julio was gaining momentum further east, the National Weather Service said.
Ray Tanabe, the NWS's acting director in the Pacific region, said Julio is expected to pass near Hawaii by late Saturday or early Sunday.
Earlier Governor Neil Abercrombie signed an emergency proclamation, freeing up funds and resources in anticipation of the storms.
"Everybody knows that a real rough time is coming," Mr Abercrombie told a news conference.
Hawaii's schools were closed on Friday, but authorities planned to keep airports open so planes could land in an emergency, even as some airlines cancelled flights, officials said.
Authorities have advised residents to prepare seven-day disaster supply kits and cautioned them against driving except in an emergency.
State officials have warned of the potential for flash floods, mudslides and power outages in the normally calm tourist haven.
Big Island rattled by earthquake
As the storms barrelled toward Hawaii, a magnitude 4.5 earthquake struck the Big Island's northern tip on Thursday morning.
The quake, with an estimated depth of just under 16 kilometres, hit at 6:24am local time, the US Geological Survey said.
There were no reports of major damage and no tsunami warnings were issued.
The tremor hit as residents rushed to gather water and supplies ahead of the twin storms.
Television images showed long lines at local supermarkets, as residents and vacationers alike rushed to stock up on water and other basics to see them through the next few days.
The Honolulu Star-Advertiser reported that shelters would open Thursday night for residents of Oahu and that state authorities were shutting down recreation areas at risk of flash flooding and other storm-related hazards.