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 said the lack of a "permanent structure" resulted in money being wasted on missions.
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 but called for Brexit negotiations to take place as quickly as possible.
Modelled on the state of the union address by the US president, the Commission president's annual speech was introduced in 2010 to detail the state of the EU and future legislative plans.
The Brexit vote has given added impetus to plans for greater defence co-operation, because the UK has always objected to the potential conflict of interest with Nato.
But Mr Juncker said a common military force "should be in complement to Nato". "More defence in Europe doesn't mean less transatlantic solidarity."
A European Defence Fund would stimulate military research and development, he said.
All EU members have military forces; most are also members of Nato; and several have extensive experience of operations abroad, from peace-keeping to war-fighting.
The real question is how to organise these component parts to get greater security. Mr Juncker insists that the EU must have a role here.
Image copyrightEunavforImage caption Many member states are taking part in an EU naval mission off the coast of LibyaHe wants to improve EU command and control facilities and appears to be suggesting that EU civil and military aspects of a given mission should be run out of the same headquarters.
He also insists that whatever the EU does it should not detract from Nato. But defence resources are finite. His critics will say nothing should be done that duplicates existing Nato activities, as that sends a signal of disarray in Western ranks to Moscow.
Read more here: Brexit vote revives dream of EU army
Europe's media unimpressed by Juncker
Since 2003 the EU has launched some 30 civilian and military operations in Europe, Africa and Asia - under the Common Security and Defence Policy (CSDP). Sixteen are still going on, including six military operations::
On future Brexit negotiations, Mr Juncker warned that the UK could only have unlimited access to the single market if it accepted free movement of people and goods. "There can be no a la carte access to the single market," he said.
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.
Jean-Claude Juncker and his team agonised over the wording of Wednesday's speech.
The UK's vote to leave the EU is undoubtedly one of the biggest crises the bloc has ever faced but Mr Juncker was determined not to dwell on it.
Media captionJean-Claude Juncker: No "a la carte" access to EU internal market for UKThere were few words on Brexit. His main message: "The European project continues. Let's choose to look forward. Be positive."
Applause resounded around the chamber of the European Parliament but how will the voters outside react?
Are they even listening? The drumbeat of nationalist, Eurosceptic populism reverberates around the continent.
Public trust in the establishment is low - whether traditional politicians, bankers or EU bureaucrats - and Mr Juncker is an unelected president.
Brexit: All you need to know about the UK leaving the EU
Mr Juncker admitted the EU was facing an "existential crisis", and he also warned that splits in the union had left space for "galloping populism".
In a blunt criticism of recent attacks on immigrants in the UK, he said he would "never accept Polish workers being beaten up, harassed or even murdered on the streets of Essex".
Mr Juncker said the EU had to deliver "concrete results" including:
He urged a renewed focus on the EU as a "driving force that can bring about unification, for instance in Cyprus".
Anti-EU MEPs lined up to criticise Mr Juncker's rallying cry: