In comments with far-reaching implications for the EU's future, the Socialist leader said the spectacular success of parties like France's own National Front (FN) reflected how the bloc had become "remote and incomprehensible" for many of its citizens.
"This cannot continue. Europe has to be simple, clear, to be effective where it is needed and to withdraw from where it is not necessary," Hollande said in a televised address to the nation.
The comments will be greeted with delight by Eurosceptics who accuse Brussels of meddling in national affairs, and by the likes of British Prime Minister David Cameron, who also advocates a scaling back of the powers currently vested in the European institutions.
But their tone will cause concern among those, particularly in Germany, who believe European integration still has further to run.
Hollande's Socialist Party suffered a humiliating setback in Sunday's elections for a new European Parliament, registering a record low vote of just under 14 percent while the FN topped the polls with nearly 25 percent.
The French leader said France remained committed to playing a leading role in Europe, but also acknowledged that the economic austerity of recent years had alienated many ordinary people.
"I am a European, my duty is to reform France and to change the direction of Europe," Hollande added.
"Europe, in the last two years, has overcome the euro crisis but at what price? An austerity that has ended up disheartening the people."
No chance in 2017
The FN's surge has left Hollande in dire straits.
He is already the most unpopular French leader of modern times and a poll released on Monday revealed that only 11 percent of voters think he would be a good candidate for re-election in 2017.
Le Nouvel Observateur, an influential left-leaning weekly, concluded that: "Hollande no longer has any chance for 2017," and urged the French left to turn its attention to finding an alternative candidate with a better chance of combating the FN.
Sunday's vote marked the first time that the anti-immigration, anti-EU FN had topped a nationwide French poll.
Final results gave the party led by Marine Le Pen just under 25 percent of the vote on a turnout of just over 43 percent, and 24 of France's 74 seats in the 751-member European Parliament.
Detailed analysis of the voting patterns made for worrying reading for the Socialists.
More than 40 percent of workers and 30 percent of the under-35s who voted backed the FN. And the party's success was broadly spread across the country.