"Europeans rightly expect their Union to keep them safe," Juncker told the European Parliament in his annual state of the union speech.
"This is why the Commission is today proposing new rules to get terrorist content off the web within one hour -- the critical window in which the greatest damage is done."
The EU's executive arm said that in January alone, nearly 7,000 new pieces of propaganda disseminated online from the Islamic State group, even as it has been driven out of most of its strongholds in Iraq and Syria.
The commission proposal calls for a "legally binding one-hour deadline" for firms to remove terrorist content once national authorities order them to do so.
It defines the content as that which incites or advocates committing terror offences, promotes a terror group's activities or offers instructions for attacks. But it also provides for means of judicial redress in the event a content provider disagrees with an order.
"Member States will have to put in place effective, proportionate and dissuasive penalties for not complying with orders to remove online terrorist content," the commission said.
"In the event of systematic failures to remove such content following removal orders, a service provider could face financial penalties of up to four percent of its global turnover for the last business year." The EU joined forces with US-based tech firms in 2016 to combat online extremism.
Until now, Brussels had pushed for the industry to regulate itself, but EU officials have for more than a year given mixed reviews to firms like Facebook, Twitter, Microsoft and Google's YouTube.