The Global Water Security report, prepared at the request of U.S. Secretary of State Hillary Clinton last year, was compiled by the office of the Director of National Intelligence with contributions from eight intelligence organizations, including the CIA and the National Security Agency.
At a State Department event Thursday to mark World Water Day, Clinton called the report's findings "sobering."
"These threats are real and they do raise serious security concerns," Clinton said.
The lack of adequate water will be a "destabilizing factor" for some countries that do not have the financial resources or technical ability to solve their internal water problems, the report says.
Some 800 million people lack a safe supply of freshwater, the United Nations says.
The report cited the Middle East, South Asia and North Africa as critical areas.
Although "water-related state conflict" is unlikely in the next 10 years, the report says, it predicts that a number of states "will exert leverage over their neighbors."
But as water shortages intensify beyond the next decade, the report warns, water in shared basins will increasingly be used as leverage. Furthermore, water could be used "as a weapon or to further terrorist objectives."
Water projects could also be used by states as a way to obtain regional influence or to preserve their water interests.
The report warns that terrorists or extremists "almost certainly" will target vulnerable water infrastructure to achieve their objectives.
Citing over-pumping of groundwater to satisfy growing food demand, the report says, during the next decade, groundwater depletion in some agricultural areas, due to poor management, will pose a risk to domestic and global food markets.
Noting that more than 15 developing countries generate 80 percent or more of their electricity from hydropower, the report says that water shortages are already affecting power generation.
Clinton on Thursday also announced a new public-private group aimed at improving water security around the world, particularly in developing countries. Partners include the Coca-Cola Company, Procter and Gamble and the Rockefeller Foundation.
Clinton said: "We believe this Water Partnership will help map out our route to a more water secure world: a world where no one dies from water-related diseases; where water does not impede social or economic development; and where no war is ever fought over water."