"I have decided to raise the level of influenza pandemic alert from phase 4 to phase 5," World Health Organization director-general Dr. Margaret Chan told a news briefing.
Phase 5 is the WHO's second highest level of warning.
Chan urged pharmaceutical companies to ramp up antiviral drug production to allow for more treatment of the H1N1 strain of swine flu and said all countries should activate pandemic preparedness plans.
The Centers for Disease Control and Prevention confirmed Wednesday the first death from swine flu outside of Mexico was a 23-month-old Mexican boy in Texas.
The child had traveled with family from Mexico City to Matamoros, Mexico and then to neighboring Brownsville, Texas, said Houston Health and Human Services spokeswoman Kathy Barton. The boy became ill and was taken to a Houston hospital. He died Monday night, she said, reported the Associated Press.
Richard Besser, the acting head of the CDC, called the news tragic, but said it's too soon to say how fast the swine flu virus is spreading.
He said health authorities had anticipated that the virus would cause deaths, and "as a pediatrician and a parent, my heart goes out to the family."
Besser went on to note in televised interviews Wednesday morning that even with seasonal flu, there are always some people who can't resist it very well.
President Barack Obama, speaking at the White House before a one-day visit to Missouri, said the confirmed death underscored the need to take steps against the disease and urged state and local authorities to increase their vigilance.
"This is obviously a serious situation. Serious enough to take the utmost precautions," said Mr. Obama, Reuters reported.
"Every American should know that the federal government is prepared to do whatever is necessary to control the impact of this virus," he said.
He also recommended that schools with confirmed or suspected cases of the disease "strongly consider temporarily closing."
The president has asked Congress for $1.5 billion in supplementary spending to prepare for a possible swine-flu pandemic and installed the newly confirmed Secretary of Health and Human Services, Kathleen Sebelius, to help lead the fight against the disease.
According to the CDC, about 36,000 Americans die on average each year from complications of seasonal flu and more than 200,000 people are hospitalized for flu-related problems.
Normally, people rarely contract swine flu and if they do, transmission from person to person is usually very limited. But this current H1N1 strain of the virus, which has acquired genes from swine, bird and human influenza, is contagious and is spreading from human to human, the CDC said.
This strain of the flu is suspected to have killed more than 150 people in Mexico and has spread to at least seven countries around the globe, from Spain to Canada to New Zealand.