Mount Agung sent plumes of ash and steam as high as 13,000 feet into the sky.
Around 2,000 passengers, mostly from Australia, were stranded at Bali airport after a volcano on the Indonesian island erupted.
At least 28 departing or arriving flights were delayed or cancelled as Mount Agung sent plumes of ash and steam as high as 13,000ft (4,000 metres) into the sky.
The ash covered roads, cars and buildings, while there were also reports of magma from the eruption.
This is the third day in a week that Mount Agung has shown signs of activity.
The country's volcanology centre has issued a red alert, warning airlines it was likely there would be a significant amount of ash emitted into the atmosphere.
Gede Suantika, an official at the volcanology and geological disaster mitigation agency: "The activity of Mount Agung has entered the magmatic eruption phase.
"It is still spewing ash at the moment, but we need to monitor and be cautious over the possibility of a strong, explosive eruption."
Among the airlines affected were Virgin, KLM, Air Asia Malaysia and Australia's Jetstar.
An airport spokesman defended the decision not to close down the facility, saying any diversions or cancellations would be up to individual airlines.
The volcano awoke for the first time in half a decade last September, forcing 140,000 people to evacuate their homes.
Its activity decreased in October, and people were told to return to their homes as the alert level decreased.
Last Tuesday it showed signs of activity again, and the country's authorities urged people living within five miles of the mountain to evacuate.
The last time Mount Agung erupted was in 1963, and it killed nearly 1,600 people.
"We will continue to see eruptions like this on similar scales, but we cannot predict when Mount Agung will really erupt," a senior volcanologist said.
Indonesia sits on the Pacific Ring of Fire and has 127 active volcanoes - more than any other country.
Mount Sinabung on the island of Sumatra has been active since 2013 and is currently at its highest alert level.