Mount Ruang, a stratovolcano in North Sulawesi Province, first erupted at 9:45 pm on Tuesday (1345 GMT) and four times throughout Wednesday, the country's volcanology agency said.
The alert level for the volcano, which has a peak of 725 metres above sea level, was then raised on Wednesday evening from three to four, the highest possible level in the four-tiered system.
"Based on the result of visual and instrumental observation that showed an increase in volcanic activity, Mount Ruang's level was raised from Level 3 to Level 4," Hendra Gunawan, head of Indonesia's volcanology agency said in a statement late Wednesday.
Authorities also widened a four-kilometre exclusion zone to six kilometres on Wednesday evening around the crater.
There were no reports of deaths or injuries, but more than 800 people were evacuated from two Ruang Island villages to nearby Tagulandang Island, which is located more than 100 kilometres (62 miles) north of provincial capital Manado, state agency Antara reported.
The volcanology agency said residents of Tagulandang must be evacuated outside the six-kilometre radius by Wednesday evening.
Gunawan also warned local residents to "be on alert for the potential ejection of rocks, hot cloud discharges and tsunami caused by the collapse of the volcano's body into the sea," the statement said.
Ruang's initial eruption late Tuesday pushed an ash column two kilometres (1.2 miles) into the sky, with the second eruption pushing it to 2.5 kilometres, Muhammad Wafid, head of the geological agency said in a statement earlier Wednesday.
The volcanology agency said Tuesday that volcanic activity had increased at Ruang after two earthquakes in recent weeks.
Indonesia, a vast archipelago nation, experiences frequent seismic and volcanic activity due to its position on the Pacific "Ring of Fire", an arc where tectonic plates collide that stretches from Japan through Southeast Asia and across the Pacific basin.
