The EC's Humanitarian Aid department has set aside the money to ensure some 20,000 residents have enough food, water and seeds.
The drought, caused by El Nino, has left parched a corridor of Guatemala bordering El Salvador and Honduras, an EC release said Friday.
"Central America, especially Guatemala, has been particularly hard hit by El Nino this season," said Karel De Gucht, the EC commissioner for development and humanitarian aid. "Thanks to our presence in Nicaragua, we have been able to quickly appraise the situation in the region and to rapidly intervene to assist the most vulnerable."
In parts of Guatemala, the commission says, 70 percent of the harvest has been lost to the drought.
The EC also is setting up food-for-work programs and improving food and water stocking systems.