The Lake of the Woods Municipal Water District said that the well feeding the water to the town is drying up.
The town, located between Frazier Park and Pine Mountain Club, has 400 homes.
The water district is currently drilling in the well to see if there is more water located at a deeper level.
Officials with the water district have put restrictions on the residents while they try to figure out how to get more water to the community.
The restrictions include outdoor watering and officials said this means that homeowners will have to alternate days to use water outdoors.
If the shortage continues, homeowners will be restricted from all outdoor watering.