The Hong Kong Observatory issued its Red Rainstorm Warning Signal at 2.50pm on Tuesday, after the amber signal had been in force for almost five hours.
The observatory said heavy rain was continuing to affect the city, and a band of thundery showers over the southern part of the territory was edging closer.
It said the downpours were particularly heavy on Lantau, where there could be serious flooding.
The observatory said more than 90 millimetres of hourly rainfall was recorded around noon in Cheung Sha on Lantau.
The Education Bureau said the city's schools should ensure that conditions were safe before allowing students to leave for the day.