About 40 Canmore residences were evacuated early Thursday, the Canadian Broadcasting Corp. reported.
Other residents have been told they may have to evacuate as well.
"The situation is actually bad and getting worse," said Canmore Mayor John Borrowman. "Now some of the smaller creeks are starting to flood."
The rain and floods have knocked out power in several parts of the town and forced the closure of a highway near the river.
The town of High River also declared a state of emergency Thursday after a river there started overflowing.
Some residents there have been encouraged to leave their homes.