The QLDC said the slip was large with lots of debris and the road was likely to remain closed all day.
"Please drive to the conditions and expect the unexpected."
Further afield, Waka Kotahi advises that a slip has also closed the Milford Road (State Highway 94).
The transport agency says some traffic lights are not working because of the outage.
"Give way rules apply, road users are advised to take extra care."
The outage affected Queenstown Airport but it says its back-up generators are running and the airport is operational.
A Lake Hayes Estate resident said there was a massive lightning flash and thunder clap at 7am, like she had never heard before.
"(It) shook our whole house."
Comments on social media described the "loudest thunder ever", and "blinding lightning, heavy rain and thunder shaking the house".
MetService says there is "a moderate risk" of thunderstorms about the entire South Island west coast and Southern Alps through the morning.
There was also a low risk of one or two thunderstorms about Southland, Clutha and Dunedin during the early morning.