The Indigenous community of Palm Island, off Townsville in north Queensland, suffered no serious damage when Cyclone Yasi hit as a category five system last night.

The severe Tropical Cyclone Yasi crossed the north Queensland coast around Mission Beach, south of Cairns, about midnight (AEST).

Cyclone Yasi was downgraded to a category two system this morning and is moving inland towards north-west Queensland.

Palm Island Mayor Alf Lacey says he was expecting the worst on the island this morning.

"I did a house visit this morning to a lot of the residents around the different areas within the shire and certainly everyone seemed to be OK," he said.

"We've now started a clean-up in terms of clearing the roads and getting the debris from the roads."