Balotelli, 25, has endured a difficult season on loan with Milan from Liverpool and his hopes of making the plane for Euro 2016 now hang desperately in the balance.
Paris Saint-Germain midfielder Thiago Motta has been called up for the first time since Italy's group-stage exit at the 2014 World Cup alongside Lorenzo Insigne, who was last picked by Antonio Conte in October 2015 but pulled out with a knee injury.
Uncapped midfielder Jorginho is rewarded for a series of strong displays for Serie A title-chasing Napoli, while Federico Bernardeschi has been promoted from Luigi Di Biagio's under-21 squad having impressed for Fiorentina this term.
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Marco Verratti has also earned a place in Conte's last Azzurri squad, although only to undergo physical tests on his recurring injury.
Italy host Spain in Udinese on March 24, before travelling to Munich's Allianz Arena to take on World Cup holders Germany five days later.
It is Conte's first squad since announcing he is to step down at the end of Euro 2016, with reports strongly linking the Italian to Premier League side Chelsea.
Italy squad in full:
Goalkeepers: Gianluigi Buffon (Juventus), Mattia Perin (Genoa), Salvatore Sirigu (Paris Saint-Germain).
Defenders: Francesco Acerbi (Sassuolo), Luca Antonelli (Milan), Davide Astori (Fiorentina), Andrea Barzagli (Juventus), Leonardo Bonucci (Juventus), Matteo Darmian (Manchester United), Lorenzo De Silvestri (Sampdoria), Andrea Ranocchia (Inter).
Midfielders: Alessandro Florenzi (Roma), Emanuele Giaccherini (Bologna), Jorginho (Napoli), Riccardo Montolivo (Milan), Thiago Motta (Paris Saint Germain), Marco Parolo (Lazio), Roberto Soriano (Sampdoria), Marco Verratti (Paris Saint Germain).
Forwards: Federico Bernardeschi (Fiorentina), Giacomo Bonaventura (Milan), Antonio Candreva (Lazio), Eder (Inter), Stephan El Shaarawy (Roma), Ciro Immobile (Torino), Lorenzo Insigne (Napoli), Graziano Pelle (Southampton), Simone Zaza>