Kalinic reportedly refused to come off the bench, during their 2-0 win over Nigeria last Saturday.
West Ham would have struggled to complete a deal for Kalinic while the striker was representing his country in Russian Federation.
Kalinic, who now plays for Fiorentina but spent last season on loan at AC Milan, has been linked with a move away from Italy in recent weeks but these actions could hamper a move.
"During the Nigeria match, Kalinic was warming-up and should have come in the second half".
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The 30-year-old can not be replaced, meaning Croatia will have to make do with only 22 players for the rest of the tournament. "However, he then stated that he wasn't ready to come on due to a back issue", said Dalic. He did the same thing against Brazil and England, saying he wasn't ready, and for yesterday's training session too.
"I have calmly accepted that, and since I need my players fit and ready to play, I have [to make] this decision".
Croatia's remaining group games are against Argentina on Thursday and Iceland one week from tomorrow.
The 30-year-old had an unremarkable season at the San Siro, scoring only six times in 41 appearances-his lowest tally for a campaign since he moved to Italy and his worst since he was at Blackburn Rovers in 2010-11.