At least 13 people have died on the US territory since Maria ripped through Puerto Rico, devastating homes and knocking out the island's electricity.
The island's governor has called it the worst storm in a century.
Operators of the Guajataca Dam said the dam, located at the northern end of Lake Guajataca in northwest Puerto Rico, failed at 14:10 local time (18:10 GMT).
It sparked a flash flood emergency for Isabela and Quebradillas municipalities, the NWS said in a series of tweets.
The agency urged residents in the area to "move to higher ground now" in an alert posted on its website.
"This is an extremely dangerous and life-threatening situation. Do not attempt to travel unless you are fleeing an area subject to flooding or under an evacuation order," the alert said.
Hurricane Maria, now a category three storm, is now moving away from the Turks and Caicos Islands and is expected to head to the northeast and east of the Bahamas over the weekend, forecasters say.
It has claimed more than 30 lives across the region, and is the second devastating storm to hit the Caribbean this hurricane season - the first being category five Irma earlier in September.