The 22-year-old scored three goals as the Azzurri reached the final of Euro 2012, but has faced criticism over his form so far this season.
Prandelli has said he hopes the former Inter Milan striker can let his football do the talking from now on.
"I have given Mario some personal advice that will stay between the two of us," Prandelli told La Gazzetta dello Sport.
"His football situation is quite clear. We still remember his goal against Germany in June, but it's almost February now. Who remembers a good recent game from him? I still believe in him, though. He has never disappointed with the national team.
"I hope that he decides to invest in himself and attempts to become one of the best in the world. He should let his football do the talking."
Balotelli has scored five goals in 16 appearances for Italy.