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Maharashtra's drought declaration came after India's national weather department forecast that the country would end its annual monsoon season with below-average rainfall, raising concerns over farmers' livelihoods.
The weather department said a stronger-than-usual El Niño phenomenon, which typically brings drier conditions to South Asia, has also contributed to unusual rainfall patterns.
The Maharashtra government said drought conditions now affect 74% of the western state, whose capital Mumbai serves as India's financial and commercial hub.
Chief Minister Devendra Fadnavis said the administration stood "firmly behind our farmer brethren" during the crisis.
The government will assess crop damage and "ensure that farmers, farm labourers and rural families receive the necessary assistance in a timely manner", his office said.
Hundreds of millions of people in India depend on the June-to-September monsoon to bring vital rains that sustain agriculture and industry.
Maharashtra has a population of 130 million and is a major agricultural state that produces cotton, soybeans, sugarcane and pulses.
Many farmers depend on rain for irrigation and are highly vulnerable to crop failures, which can push whole families into financial crisis.
The impact of low rainfall is also being felt in southern India, where Karnataka state has also announced aid for farmers in drought-hit areas.
El Nino is a naturally occurring climate pattern associated with warmer ocean temperatures in the Pacific that can change wind and rainfall patterns around the world.
Scientists say human-caused climate change can amplify its effects by making more energy and moisture available to fuel extreme weather.