In her capacity as special envoy for the UN's refugee agency (UNHCR), the Hollywood star visited Syrian refugees and displaced Iraqis near Dohuk, in the autonomous region of Kurdistan.
"I'm shocked by what I've seen today. This is my fifth visit to Iraq since 2007 and the suffering is worse than anything I've seen in that time," she told reporters at a camp in Khanke.
Jolie last visited Iraq in 2012, before the Islamic State jihadist group became a dominant force in large parts of Syria and launched a devastating offensive in Iraq last year.
More than two million people have been internally displaced in Iraq over the past year alone. Nearly half of them have found refuge in Kurdistan and the numbers continue to grow.
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"UNHCR received only half of the funding it needed in 2014 for programmes in Iraq and Syria and is extremely concerned at the slow pace of pledges for this year. Without more assistance, the situation is unsustainable," Jolie added.
"We are being tested here as an international community and so far, for all the immense efforts and good intentions, the international community failed," she said.
Neil Wright, the UNHCR representative in Iraq, deplored that world powers' financial pledges did not reflect the scope of a crisis that has forced more than 13 million people from their homes in Syria and Iraq.
"It is time to question whether the governments, whether the donors need to recalibrate the billions they are spending on military solutions and the millions that they are spending on relieving suffering amongst the displaced and amongst the communities who are so generously hosting them," he said.
According to the UNHCR, more than 3.8 million Syrians have fled to neighbouring Turkey, Lebanon, Jordan, Iraq and to Egypt.