Turning southward into a region of low wind shear, Narelle intensified into a severe tropical cyclone on 9 January.

[nb 2] Traveling westward, the system was forecast to intensify as it moved into an area highly favouring tropical cyclogenesis with very warm waters (with sea surface temperatures of 30 to 31 °C (86 to 88 °F)) and low wind shear.

[6] After enough convection wrapped around the centre of circulation, the BoM classified the low as Tropical Cyclone Narelle, the second named storm in the western region during the 2012–13 season.

[8] Following the development of an eye early on 9 January, the Bureau of Meteorology upgraded Narelle to a severe tropical cyclone, with winds estimated at 120 km/h (75 mph).

[12] Late on 11 January, Narelle is estimated to have attained its peak intensity with winds of 195 km/h (121 mph) and a barometric pressure of 930 mbar (hPa; 27.46 inHg).

[7] At the same time, the JTWC assessed the storm to have attained one-minute sustained winds of 215 km/h (134 mph), ranking it as a Category 4-equivalent cyclone on the Saffir–Simpson hurricane scale.

[15] Hours after Narelle reached peak intensity, increasing wind shear caused the storm's eyewall to erode and the outflow to become somewhat restricted.

[16][17] By the afternoon of 12 January, the storm's structure had significantly degraded, with the eye no longer apparent and a marked decrease in cold cloud tops.

[18] Later that day, the cyclone made its closest approach to Western Australia, passing approximately 330 km (205 mi) northwest of Exmouth.

[7][21] Rapid weakening ensued on 14 January, as the effects of cooler waters and dry air caused the deep convection to dissociate into an area of shallow stratocumulus clouds.

[30] A blue alert, the Department of Fire and Emergency Services (DFES) lowest level of readiness, was also issued for areas between Mardie and Whim Creek.

[37] The Rio Tinto Group shut down iron exports at its Dampier and Cape Lambert ports due to rough seas.

[7] In North West Australia, especially around Exmouth, the storm brought gusty winds that downed a few trees and produced as much as 76 mm (3 in) of rain.

[42] Between 15 and 16 January, the remnants of the storm brought widespread moisture to southern areas of Western Australia, especially the wheatbelt region, leading to scattered showers and thunderstorms.

In Perth, the storm brought unusually warm, moist air, keeping temperatures from dropping below 27.3 °C (81.1 °F), making it the warmest January night in 24 years.

[45] On 18 January, a French sailor had to abandon his yacht off the coast of Tasmania after its mast broke due to rough weather caused by the remnants of Narelle.