Governor Jerry Brown issued the declaration at a press conference in a parched, brown slope of the Sierra Nevada mountains that would normally be covered by deep snow.
"Today, we are standing on dry grass where there should be five feet (1.5 meters) of snow," Brown said yesterday. "This historic drought demands unprecedented action."
The executive order issued by Brown would aim to achieve a 25 per cent reduction in water usage across cities and towns throughout California by a combination of measures.
The reductions would be achieved by ramping up enforcement to prevent wasteful water use, while investing in technologies designed to make California more drought-resilient.
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The State Water Resources Control Board, which manages California's water supply, would be tasked with achieving the reduction.
The order also set out new measures to reduce water use, including the replacement of 50 million square feet (4.6 million square meters) of lawns with drought-tolerant landscaping.
A state-wide consumer rebate programme would also be set up to encourage individuals to replace old appliances with modern, water and energy efficient models.
New homes and developments would also be banned from using potable water for sprinkler systems unless water-efficient drip irrigation systems are used.
Brown had already declared a state of emergency in California over the crippling four-year drought, the most severe on record.