Over next few days, the system organized while moving east southeastward, before intensifying into a Category 1 tropical cyclone on the Australian region scale on February 26.

On the next day, Percy was steered southward by a blocking ridge of high pressure, while stretched out the structure of the storm into an elliptical shape, weakening it back to Category 3 status.

Afterward, the storm rapidly reintensified, reaching its peak intensity as a Category 5 tropical cyclone on March 2.

During February 23, the Fiji Meteorological Service reported that Tropical Disturbance 10F, had developed within the monsoon trough about 700 kilometres (435 mi) to the west of the Tuvaluan atoll of Funafuti.

Overnight, the tropical depression underwent explosive development, with the deep convection increasing spatially and in organization while cooling.

At this point in time, Percy was located 120 miles (190 km) east of Fongafale, Tuvalu, and was moving towards the east-southeast at 14 knots (16 mph; 26 km/h).

On February 26, Percy reached Category 1 status, while located 400 miles (640 km) north of American Samoa.

The trough caused the cyclone to intensify even further to a Category 3 storm, as it passed between Fakaofa and Swains Island.

[2] By February 28, Percy bypassed the Pukapuka and Nassau Islands as a Category 3 tropical cyclone, as it continued to move south-southeastward.

Cyclone Percy maintained Category 5 status for 18 hours, while located 110 mi (180 km) west of Palmerston Island.

[3] When Percy quickly reached tropical cyclone strength, forecasters began to issue watches and warnings for the American Samoa and Tokelau areas, which were impacted by earlier storms Nancy and Olaf.

In Nukunou and Fakaofo, forecasters predicted that the cyclone would bring 60–70 mph (97–113 km/h) winds, heavy rains and possible flooding in low-lying areas.

[9] Percy impacted Tokelau between February 25–27, where it caused widespread damage within the three atolls of Nukunonu, Fakaofo and Atafu.

[15][16] In Fakaofo, the storm surge from Percy damaged a sea wall and caused major beach erosion.

[16] The Northern Cook Islands were hardest hit by Percy as the storm left 640 people homeless, of which 600 were in Pukapuka, and 40 were in Nassau.

[3] In Tokelau and northern Cook Islands, the governments of Australia and New Zealand offered over $200,000 (2005 USD) in relief aid.

[20] In Tokelau, many of the local officials feared about contamination since the cyclone had scattered human waste, trash, and other debris in the ocean and across the island.

[16] As a result of the significant damage in Tokelau and the Cook Islands, the name Percy was retired and replaced with Pita.