Water was seeping out of the aging, badly eroded dam across the Mexican border in Ciudad Juarez, and crews spent much of the night pumping out the area, spokeswoman Juliet Lozano said. U.S. engineers were headed to the site Friday, she said.
The threat came after more than an inch of rain fell on the area Thursday, most of it in about an hour, and a later downpour left pools of water on streets. Forecasters predicted a 50 percent chance of rain for Friday.
Mexican officials said Friday the dam was not at risk of overflowing, but authorities in Ciudad Juarez ordered more than 4,000 families to evacuate earlier this week as a precaution. Many families resisted, and faced being forced out.
Between 1,500 and 2,000 residents were asked to leave downtown El Paso after the Army Corps of Engineers estimated that a dam break could set free up to 6 million gallons of water there.
"We're talking like a tidal wave hitting El Paso," Mayor John Cook said.
Officials in the city of 580,000 said about 950 people were at its convention center, which months earlier held Katrina evacuees. It was unclear when they could safely return, Lozano said.
Officials also were watching 69 smaller dams throughout Ciudad Juarez.
Mexican federal officials declared Ciudad Juarez a disaster area and estimated damage there at $45 million. Damage on the U.S. side could reach $250 million, said Democratic Rep. Silvestre Reyes.
The El Paso area has received more than 8½ inches of rain this year, almost all of it this week.