While the majority of pundits back the likes of Spain, Germany and hosts France to succeed at the tournament, Wenger believes that Ante Cacic's side boasts plenty of impressive players.
The Gunners boss told the club's official website: "One team, above all – who nobody speaks about – who has the internal quality to be a major favourite, is Croatia.
"When you look at the players they have – [Mateo] Kovacic, [Ivan] Rakitic, [Luka] Modric, [Dejan] Lovren, [Sime] Vrsaljko, [Darijo] Srna, and I forget so many – but you think 'oh'.
"When you look at the names you think there is something there, so why should they not be favourite? For me, they could be the surprise package."
Croatia will take on Turkey, the Czech Republic and current European champions Spain in Euro 2016's Group D.