The European Union needs a military headquarters to work towards a common military force, the commission president has told MEPs in Strasbourg.
Jean-Claude Juncker added that the lack of a "permanent structure" resulted in money being wasted on missions, BBC reported.
Part of his annual state of the union address was devoted to the UK's unexpected vote to leave the EU.
He insisted that the bloc was not at risk and urged Brexit negotiations to take place as quickly as possible.
The Brexit vote has given added impetus to plans for greater defense cooperation, because the UK has always objected to the potential conflict of interest with NATO.
But Juncker said a common military force "should be in complement to NATO".
"More defense in Europe doesn't mean less transatlantic solidarity. A European Defense Fund would stimulate military research and development," he said.
- Existential Crisis
On Brexit, Juncker warned that the UK could not expect selective "a la carte" access to the internal market without accepting free movement of people.
The single market has dominated the Brexit debate in the UK.
Prime Minister Theresa May distanced herself last week from remarks by Brexit Minister David Davis when he said remaining in the single market would be "very improbable" if it meant giving up control of British borders.
The commission president's state of the union speech-introduced in 2010-is modeled on the annual speech by the US president and aims to report on the condition of the EU and outline a future legislative agenda.
Juncker admitted the EU was facing an "existential crisis", but he said it had to deliver "concrete results" in response.
He urged a renewed focus on the EU as a "driving force that can bring about unification, for instance in Cyprus".
Splits in the union had left space for "galloping populism", he said, "and we cannot accept that, as populism doesn't solve problems, on the contrary populism creates problems".
In a blunt criticism of recent attacks on immigrants in the UK, he said he would "never accept Polish workers being beaten up and harassed on the streets of Essex".
EU leaders meet in Slovakia's capital Bratislava on Friday, without UK Prime Minister Theresa May.
Late on Tuesday, the chairman of the summit, European Council President Donald Tusk, warned that the EU should be mindful of its own ambitions in light of the Brexit vote.
"The keys to a healthy balance between the priorities of member states and those of the union lie in national capitals," Tusk said.
"The institutions should support the priorities as agreed among member states, and not impose their own ones."
That remark contrasted with Juncker's insistence on Wednesday that "too often, national interests are brought to the fore" in Europe.
