The full scale of damage caused by the estimated 300km/h (190mph) winds is not yet known as power and phone lines are cut in some areas.
Prime Minister Julia Gillard said Queensland had been braced for the cyclone.
“Even as we worried about fellow Australians facing danger and very, very frightening hours I think at the same time we knew that they were facing that danger with courage, and that they were well prepared,” she said.
In Cairns, residents have been told they can return home; Cairns Base Hospital has reopened more than 24 hours after evacuating all its patients to Brisbane.
Powerful winds in the city have twisted traffic lights, blown out glass and destroyed trees.
Metres-high tides were also threatening Townsville, sparking new warnings of flooding in low-lying areas.
But it was the smaller communities south of Cairns that were hardest hit by the storm.
Coastal homes have been destroyed, their roofs ripped off, and residents have reported the destruction of banana and other fruit crops.
In Cardwell, boats were piled on top of each other in the Port Hinchinbrook Marina.
Emergency services in Tully said that up to 90% of buildings there had been extensively damaged.
Entire roofs have been ripped from houses in some coastal communities
“Nothing’s been spared. The devastation is phenomenal, like nothing I’ve ever experienced,” said David Brook, the manager of a resort at Mission Beach, in the direct path of the cyclone.
“It was really terrifying, but we were safe,” said Barbara Kendall, a coastal resident reported as having spent the night in her car with her husband and cats.
“It’s a terrifying sound. It’s really hard to describe. All I could hear was the screeching of the wind.”
Internet chat boards are crammed with people trying to track down their relatives, although lack of contact is mostly being blamed on the destruction of infrastructure, not lives.
“The last thing we want is some sort of casualty when people might think we have the all clear,” Cairns Mayor Val Schier said.
Ms Bligh said there was still “a very dangerous situation in Cairns and Townsville around those storm surge areas”.
Cyclone Yasi has now been downgraded to a category two storm as it continues to cross north-eastern Australia.
BBC Online, Image Whitsundays.com.au
Nick Bryant BBC News, Sydney
Warned to expect the worst storm in the state’s history, cities and towns were in complete lockdown. Over 10,000 local residents had sought refuge in the major evacuation centres in Cairns and Townsville.
Those cities were largely spared, but it is the smaller communities along the coast which bore the brunt of the storm. Huge palm trees and major power lines have been felled. The streets are strewn with debris.
Still, State Premier Anna Bligh said she had feared much wider devastation, given the scale of the storm, its once-in-century power, and the fact that it hit such a densely populated area