Officials said the KNM Helge Ingstad could sink after the collision in Sture, north of Bergen, Norway's second largest city.
According to reports from the rescue crews, seven people have been lightly injured in the collision, and there has been no oil spilled from the tanker, which suffered a lot less damage than the frigate, which was returning from a North Atlantic Treaty Organisation military drill.
"Due to the damage to the frigate it was moved to a safe place", Nato's Allied Maritime Command said in a statement.
The KNM Helge Ingstad frigate has been listing dangerously.
The Navy quickly evacuated all the crew except for 10 essential staff members to prevent a possible fuel leak.
The two vessels collided at about 04:00 local time (03:00 GMT) as the frigate was sailing inner fjords for training, officials say. The tanker, now in port undergoing inspection, was not damaged in the incident and none of its 23-member crew injured. The frigate was lying in the water nearly on its side with its stern under the water.
"It took on a lot of water and there is a real danger that it will sink where it is", an official for the Sola rescue centre told AFP. Its crew of 137 had been evacuated, rescue leader Ben Vikoeren at the Joint Rescue Coordination Centre for southern Norway said. The shipping site Sysla reported the tanker had been loaded with crude oil and was on its way to Britain.
Sture, a major export oil terminal, was shut down temporarily as a precautionary measure.
An investigation into the causes of the incident will be launched today, in collaboration with the Defense Accident Investigation Board Norway (DAIBN) and the Marine Safety Investigation Unit (MSIU) from Malta.
The tanker was not damaged, and its 23-strong crew remains onboard, according to AP.
It had recently taken part in NATO's large-scale Trident Juncture military exercises, where it was engaged in submarine hunting maneuvers.
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