Water splashed over the top of the Industrial Canal's floodwall, but city officials and the Army Corps of Engineers said they expected the levees to hold.
"We are seeing some overtopping waves," said Col. Jeff Brady, commander of the Army Corps of Engineers' hurricane protection office, reported the Associated Press. "We are cautiously optimistic and confident that we won't see catastrophic wall failure."
At hurricane emergency headquarters in Austin, Texas, President Bush offered an assessment of the government's handling of the storm and praised Gulf Coast residents for heeding authorities and evacuating the area.
"The coordination on this storm is a lot better than during Katrina. A lot of it had to do with the governors ... of Alabama, Louisiana, Mississippi and Texas. There was clearly a spirit of sharing assets," he said.
Gustav hit Monday morning near the Cocodrie, a low-lying community in Louisiana's Cajun country, 72 miles southwest of New Orleans, according to the National Hurricane Center.
In anticipation of the storm, nearly 2 million people evacuated south Louisiana, along with tens of thousands from coastal Mississippi, Alabama and southeastern Texas.
Only about 10,000 people were thought to have stayed behind in New Orleans, Reuters reported.
Memories of Katrina, which flooded 80 percent of New Orleans and killed more than 1,600 along the Gulf Coast, motivated the evacuees and prompted officials to insist on people vacating the storm's path.
"We're nervous, but we just have to keep trusting in God that we don't get the water again," said Lyndon Guidry, who headed to Florida just a few months after he was able to return to his home in New Orleans, according to the AP.
The Republican Party also scaled back its convention plans, scheduled for St. Paul, Minn., this week. President Bush cancelled a Monday appearance at the RNC to head to Texas, where emergency operations are based.
"It's amazing," said New Orleans Mayor Ray Nagin. "It makes me feel really good that so many people are saying, 'We as Americans, we as the world, have to get this right this time. We cannot afford to screw up again."
Homeland Security Secretary Michael Chertoff said search and rescue would be the top priority once the storm passed. High-water vehicles, helicopters, fixed-wing aircraft, Coast Guard cutters and a Navy vessel that could be used as an emergency room were positioned around the region.
Hurricane Gustav has killed at least 94 people in the Dominican Republic, Haiti and Jamaica.