The AC Milan striker has been struggling with minor muscle complaints during the Azzurri's pre-tournament training camp and his chances of facing the Three Lions on June 14 had been thrown into doubt.
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"He can play," Castellacci was quoted as saying by Milan's official website. "He is training hard. He had an overload of work but we are managing it.
"He is at the disposal of the head coach and is ready to play."
The fitness of Balotelli has become a key topic of debate in Italy following Giuseppe Rossi's omission from the 23-man squad for Brazil.
Castellacci has now claimed the Fiorentina forward, who had battled back from a serious knee injury to be in contention for the World Cup, was physically fit enough to have been selected.
"From a medical point of view, he had recovered well enough," said Castellacci.
"It's clear, however, that Giuseppe was not in the optimal physical condition. It was a decision taken for many reasons, but not superficially."
Italy face Luxembourg in their final pre-tournament friendly before the clash with Roy Hodgson's men in Manaus on June 14.