The warning comes as Europe faces a heatwave in several countries.
Nearly half of the European Union is exposed to warning levels of drought, according to a new July report from the European Commission's Joint Research Centre.
Around 46% of the EU is exposed to "warning" drought levels while 11% is exposed to the higher "alert" level, it said.
"A staggering portion of Europe is currently exposed to warning and alert drought levels, associated with either soil moisture deficit or its combination with vegetation stress," the report's authors said.
There have been severe dry conditions in several countries due to a lack of rain in addition to early heatwaves. Across Europe, severe drought is "expanding and worsening", they added.
The report was released as multiple European countries face extreme temperatures this week and raging wildfires this past week particularly in France, Spain and Portugal.
"Climate change increases the risk of severe droughts and forest fires in the world," said Mariya Gabriel, Commissioner for innovation, research, culture education and youth.
Impact of drought
The Commission warned that France, Romania, Spain, Portugal and Italy will likely have a drop in crop yields due to the water shortage and heat.
Italy has declared a state of emergency in several regions due to its worst drought in 70 years.
The country's longest river, the Po River, in particular, was several metres lower than usual with the drought leading to restrictions on water in the area.
The drought is threatening a large percentage of Italy's agricultural production, with the country's farming lobby saying almost half of Italian farms are at risk with crops devastated by drought and high temperatures.
They estimate that the damage has already exceeded three billion euros.
Drought conditions also have an impact on energy production -- as hydroelectric and thermoelectric power is reduced or suspended.
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