Sandy knocked out power to at least 6.2 million people across the east of the country and New York's main utility said large sections of Manhattan had been plunged into darkness by the storm, with 250,000 customers without power as water pressed into the island from three sides.
The 16 deaths were reported in New Jersey, New York, Maryland, North Carolina, West Virginia, Pennsylvania and Connecticut.
Some of the victims were killed by falling trees while police in Toronto said a woman was killed by a falling sign as high winds closed in on Canada's largest city.
A New York City hospital was moving out more than 200 patients after its backup generator failed when the power was knocked out by the storm.
Dozens of ambulances lined up outside NYU Tisch Hospital on Monday night as doctors and nurses began the slow process of taking people out.
Just before Sandy's centre reached land, the storm was stripped of hurricane status, but the distinction was purely technical, based on its shape and internal temperature.
It still packed hurricane-force wind and forecasters were careful to say it remained every bit as dangerous to the 50 million people in its path.
The full extent of the storm's damage across the region was unclear and was unlikely to become known until daybreak in America.
Heavy rain and further flooding remain major threats over the next couple of days as the storm makes its way into Pennsylvania and up into New York State.
The National Hurricane Centre announced that Sandy had come ashore near Atlantic City. It smacked the boarded-up big cities of the Northeast corridor, from Washington and Baltimore to Philadelphia, New York and Boston, with stinging rain and gusts of more than 85mph.
The sea surged a record of nearly 13ft (4 meters) at the foot of Manhattan, flooding the financial district and subway tunnels.
President Barack Obama and Mitt Romney suspended their campaigning with just over a week to go before Election Day.
At the White House, Mr Obama made a direct appeal to those in harm's way.
He said: "Please listen to what your state and local officials are saying. When they tell you to evacuate, you need to evacuate. Don't delay, don't pause, don't question the instructions that are being given, because this is a powerful storm."
New York Mayor Michael Bloomberg said late Monday that the worst of the rain had passed for the city and that the high tide that sent water sloshing into Manhattan from three sides was receding.
A construction crane atop a luxury high-rise in midtown Manhattan collapsed in high winds and dangled precariously.
Residents in surrounding buildings were ordered to move to lower floors and the streets below were cleared, but there were no immediate reports of injuries.
The facade of a four-story Manhattan building in the Chelsea neighbourhood crumbled and collapsed suddenly, leaving the lights, couches, cabinets and desks inside visible from the street. No-one was hurt, although some of the falling debris hit a car.
The major American stock exchanges closed for the day, the first unplanned shutdown since the September 11 attacks in 2001. Wall Street expected to remain closed on Tuesday. The United Nations canceled all meetings at its New York headquarters.
Off North Carolina, a replica of the 18th-century sailing ship HMS Bounty that was built for the 1962 Marlon Brando movie Mutiny on the Bounty went down in the storm, and 14 crew members were rescued by helicopter from rubber lifeboats bobbing in 18ft seas.
Another crew member was found hours later and was hospitalised in critical condition. The captain was still missing.
The Coast Guard later said that a woman who was rescued in the Atlantic after abandoning the HMS Bounty replica ship has died.
Coast Guard Petty Officer 3rd Class David Weydert says 42-year-old Claudene Christian was unresponsive when she was pulled from the water on Monday evening and was later pronounced dead at a hospital.