Aerial images of the Edenville dam, which is nearly 150 miles (241 kilometers) north of Detroit, showed water rushing toward nearby Wixom Lake.
The National Weather Service has issued a flash flood warning for the area.
Governor Gretchen Whitmer said that following the failure of the Edenville and Sanford dams, water levels in downtown Midland could reach 9 feet (2.7 metres) high in the next 12-15 hours.
A slow-moving storm doused Michigan with heavy rains over the past several days, triggering fears of imminent dam failure and flood warnings across the state.
"In the next 12 to 15 hours, downtown Midland could be under approximately nine feet of water. We are anticipating an historic high water level. Tonight I issued an emergency declaration to ensure that state and local officials have the resources that they need in order to respond to this extreme flooding," said the Michigan governor.