Italy came into the tournament on the back of a match-fixing scandal back home and three consecutive friendly defeats in which they failed to score but surpassed expectations in their 1-1 draw with Spain on Sunday.
However, after watching Croatia's performance in their 3-1 win over Ireland, Prandelli said Thursday's opponents were possibly more dangerous than the European and world champions.
"They're a very well organised team, a characteristic is that they always want to get high up the pitch and they're a team which can change their system during the game," he warned.
"They can play with two centre-halves and two central midfielders, or a diamond system, or three midfielders behind a striker.
"We've followed them for a while, and they can change their system, they know each other very well, they have great intensity in their game and they're very difficult to overcome from a physical perspective.
"We saw the video and talked about it and we know we're going to struggle a bit more because of the way they play football."
However, Prandelli rejected a suggestion from his rival coach Slaven Bilic, who claimed in an earlier news conference than Croatia playmaker Luka Modric was a better playmaker than Italy's Andrea Pirlo.
"Modric is a great player but to say he's better than Andrea, he needs to start winning some trophies because players are remembered for what they have won in medals," said Prandelli.
Prandelli singled out Antonio Cassano for praise and refused to comment on the controversial striker's comments the day before.
Cassano, back in action after undergoing a minor heart operation last October, said he hoped there were no homosexuals in the national team, later apologising for the remark.
"We're not going to keep talking about this, we've got to smile and focus on the questions to do with tomorrow's game," said Prandelli.
"Sincerely, he gave his all against Spain, he's only 70 percent fit but he gives 100 percent. He set up the chance, he succeeded in his dribbling and I hope he continues this way."
