Manchester City frontman Balotelli had been excluded from the Azzurri squad in February for a violation of team ethics over his stamp on Tottenham's Scott Parker during a Premier League clash at the Etihad Stadium.
Balotelli's club future in England was left in doubt as his sending-off against Arsenal prompted boss Roberto Mancini to declare he would sell the Italian at the end of the season.
Balotelli has since apologised for his red card at the Emirates, but the incident posed further questions over his international place as well.
However, speaking to Rai, Prandelli maintained Balotelli was never out of contention for a place in the Italy squad that is set to face continental and world champions Spain, Ireland and Croatia in Group C at the Euros.
"I never really thought of doing this without Balotelli, as he is a focal point of the national team," Prandelli said.
"Have I made peace with Balotelli? Yes, although to be honest we never argued in the first place.
"I was pleased that he took responsibility with his statements after the latest incident at Manchester City. I like those who stand up and accept responsibility for their actions."