Kayangel is located 24 kilometres away from Palau's capital, Koror, and was in the eye of the typhoon.
A helicopter pilot who flew to Kayangel on Thursday afternoon reported the island had received major damage to structures and trees, the Palau National Emergency Committee (NEC) said.
Earlier local journalist Bernadette Carreron told Radio Australia's Pacific Beat most of the people living on Kayangel had ignored a mandatory evacuation order ahead of the storm.
The NEC says all 69 residents on the island have now been accounted for and had no significant injuries.