Making sure his side conduct themselves in the right manner has been a key element of Prandelli's tenure since taking over after the 2010 World Cup and he has continually omitted players serving club bans.
Manchester City's Balotelli returned from a domestic suspension to score a goal and shine in Saturday's 3-0 Premier League win over Blackburn Rovers but it was not enough to change Prandelli's mind despite Italy having a raft of injured forwards.
"The players know it, acting like this they risk missing the Euros," Prandelli told a news conference ahead of Italy's friendly with United States on Wednesday.
"Enough of this football full of rash reactions and punches, it is a sign of weakness. You can't be in the national squad if you risk leaving the team with 10 men."
Balotelli was banned for kicking out at Tottenham Hotspur's Scott Parker last month while AS Roma forward Pablo Osvaldo, also left out of Prandelli's squad, was dismissed on Sunday for an off-the-ball incident in the 4-1 loss at Atalanta.
Prandelli said he was also "very upset" that neither player had called him to ask about their exclusion.
With forwards Antonio Cassano and Giuseppe Rossi facing a race to be fit for June's Euros, Prandelli's stance against Balotelli is all the more surprising given the 21-year-old would otherwise be a shoo-in for the tournament in Poland and Ukraine.
Roma's Fabio Borini has received a first call-up as Prandelli plans for group matches against holders Spain, Croatia and Ireland.
Midfielder Daniele De Rossi was dropped from Roma's squad on Sunday for arriving late for a team meeting but has still been called up by Prandelli as his misdemeanour was deemed minor.
Prandelli also said he had "never thought" of stripping the captaincy from Gianluigi Buffon after the Juventus goalkeeper said he would never have owned up to Sulley Muntari's effort crossing the line in AC Milan's 1-1 draw with Juve on Saturday.
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