Uruguay must beat Cesare Prandelli’s side on Tuesday to progress from Group D along with Costa Rica, with a draw or Azzurri win eliminating them.
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"There is a loose cannon in Balotelli,” the 38-year-old told La Gazzetta dello Sport.
"They tell me that he never maintains a whole season at a high level, but the problem is that everything is decided for us in 90 minutes and, if Balotelli steps out there on the right foot, in a single game he can send anyone into a tailspin."
The Celeste suffered a shock defeat in their World Cup opener, going down 3-1 to Costa Rica, but Nacional forward Recoba believes their 2-1 victory over England has reignited belief in the Uruguay camp.
"The victory over England has raised the morale of all, there is a lot of enthusiasm," he said. "Now this will be the game of death, the worst that could have happened to both teams."
Luis Suarez returned from injury to score both goals against England and Costa Rica's victory over Italy ensured Prandelli's men and the South American nation are level on three points, although the Azzurri have a superior goal difference.
But Recoba insists his country are not solely reliant on the clinical Liverpool striker to see them through to the last 16.
"He is a magnificent player, a lethal striker, complete. Let's just hope that he is okay. And he is the man who makes the difference," he continued.
"We have several other weapons, apart from Edinson Cavani. The mindset in general has also changed, not only in our country. Today in football you must win only through quality."