Croatia, who beat Belgium in the 2018 semi-finals, need just a point to guarantee progress to the last 16 while FIFA second-ranked side Belgium almost certainly need to win.
A shock 2-0 defeat by Morocco on Sunday was followed by talk of rifts in the Belgium camp, with playmaker Kevin de Bruyne (31) and defender Jan Vertonghen (35) reportedly at loggerheads.
De Bruyne was also reported to have said that Belgium's so-called Golden Generation is now too old to win the World Cup, but Dalic was having none of it when asked on Wednesday.
"We are playing against the second-best football team in the world and they were number one," he told reporters.
"They are a great team and if we could choose we would not have selected this match to be the decisive one.
"We will not fool ourselves by their under-performance in the last two games."
Croatia drew with Tunisia in their opener but hit top form in a 4-1 defeat of Canada, leaving them in good shape going into the clash at the Ahmad Bin Ali Stadium.
Dalic has ruled out any notion that Croatia would be happy to play for a draw.
"We will play as we did against Canada, high quality, high tempo. It's going to be a difficult game," he said.
"Belgium are a top team, they have De Bruyne and Hazard and we will not be fooled by media stories and some rumours. We are expecting the best of Belgium, a top-notch national team.
"They haven't become a bad football team overnight. I am not focussed on any other aspects, we are just focussed on their strength and quality."
Belgium have so far been without their powerhouse striker Romelu Lukaku (29) but he is expected to be back on Thursday which could spell bad news for Croatia's defence.
"We are preparing for him to start and that changes the Belgium game," Dalic said. "He is great in the air and is a great attacker. But if we plan well we will have half our work done and the other half will be on the pitch."
Lukaku's former Chelsea teammate Mateo Kovacic (28) had some simple advice for his teammates on how to deal with Lukaku.
"I will leave that to the coach but I will say 'just don't fight him.'"
