About 3,700 people are being evacuated from the slopes of the Tungurahua volcano, 135km (85 miles) south of Ecuador's capital Quito.
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Tungurahua began rumbling in May in its loudest activity since 1999, when it became active after eight decades of dormancy.
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The town of Casua was evacuated as the volcano began spewing lava and toxic gases.
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No casualties are reported but roads and bridges are blocked and villagers have lost cattle and crops.
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Many villagers fled to refuge at schools and churches in the nearby town of Pingue.
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Troops helped the evacuation from the volcano, which means "throat of fire" in the local language. President Alfredo Palacio visited affected villages.
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Residents of Cotalo with stones projected by the volcano. The government has promised $5.7m in relief funds for the region.