The storm prompted the cancellation of flights and the traditional Independence Day parade in this resort and retirement community popular with Americans.
Lane is expected to dissipate as it moves inland, forecasters with the U.S. National Hurricane Center said.
At 5 a.m. EDT, the storm was about 100 miles east of Los Mochis and moving north at 7 mph. It had maximum sustained winds of 50 mph down from 85 mph on Saturday.
Dozens of surfers paddled out Saturday to massive waves whipped up by the storm, and residents splashed in knee-deep water. People living in low-lying areas were evacuated and shelters were set up for the displaced.
"It was strong. It hit badly, but it could have been worse," said Carlos Borcio, a 25-year-old tourist visiting from Culiacan who was watching the waves and drinking beer with two friends.
Jesus Martinez rode his bike to work through flooded streets.
"It's better this way," he said. "Normally, it's really hot, and now it's nice."
Earlier this week, rains from the storm lashed coastal towns to the south, causing a landslide that killed a 7-year-old boy on Thursday in Acapulco and flooding across western Mexico that forced hundreds of people to abandon their homes.
It was the second hurricane to menace the region this month. Hurricane John unleashed wind and rain on Cabo San Lucas, a remote enclave on the Baja California's southern tip.
Meanwhile, Hurricane HeleneSunday but continued churning in the open Atlantic hundreds of miles from land, forecasters said.