The warning was issued Wednesday for Surf City north to Duck. The warning includes the Pamlico and Eastern Albemarle sounds.
The first named storm of the Atlantic hurricane season has prompted officials, hotel owners and would-be vacationers as far north as New England to carefully watch forecasts.
On Wednesday afternoon, Arthur was moving north at about 7 mph (11 kph). It was centered about 435 miles (700 kilometers) south-southwest of Cape Hatteras, North Carolina.
Arthur had nearly reached hurricane strength, with maximum sustained winds around 70 mph (113 kph). A storm is considered a hurricane when those winds measure at least 74 mph (119 kph).