Balotelli had been called into the squad by coach Antonio Conte after being sidelined for Italy's opening three wins in Group H.
However the Liverpool striker has left Italy's Coverciano training camp after being diagnosed with a "hamstring strain and sore groin". Italy will also miss Juventus defender Angelo Ogbonna, who has a sore left thigh.
A statement from the FIGC said: "Mario Balotelli and Angelo Ogbonna will leave the National team training camp today (Saturday).
"Although Ogbonna's left thigh injury is improving, he has been advised to avoid stressing the injury as a precaution.
"It is the same scenario for the Liverpool striker (Balotelli), who since yesterday has felt a hamstring strain and a sore groin."
Italy sit second in Group H behind Croatia after three opening wins for each side but have not beaten the Croats in 72 years.