Croatia qualified for the London Games with the victory while Canada needs to win two games over the weekend to capture the last remaining Olympic berth. Canada's next game is against Argentina on Saturday.
The Canadians had a 46-34 rebounding edge but Croatia had the shooting. However, Croatia had a 51 per cent field-goal percentage while Canada struggled at 37 per cent.
Head coach Allison McNeill said her team wasted a solid defensive effort with poor shooting.
"At the end of the day we just missed shots that you probably shouldn't at this level and they didn't," she said. "If you're holding a team to 59 points you're playing pretty good defence, but you've got to put the ball in the hoop a bit more."
Canada had a five-point lead after three quarters, but was outscored 18-10 in the fourth thanks to a series of fouls and missed opportunities. McNeill said her team made a few key turnovers and missed several easy layups.
Courtnay Pilypaitis of Orleans, Ont., scored 11 points for Canada.
Kimberley Smith of Surrey, B.C., continued to struggle with only four points on the night. After scoring 11 points in the opening win over Mali, she has failed to reach double digits in consecutive losses.
McNeill said the guard needs to find her scoring touch for the Canadians to qualify this weekend.
"People are really keying on her," McNeill said. "There's a lot of clutch-and-grabbing, but we have to get her shots.
"I know she will come back and shoot the ball better, but we do have to get her going."
McNeill said her team hadn't given any thought to their potential opponents, because they felt confident about beating Croatia. But she doesn't expect her players to have trouble refocusing on the task ahead.
The team has spent the past four years with a sports psychologist, who is currently with the squad in Turkey. He addressed the team after the game, urging them to focus on the positive aspects of their performance — mostly their defensive play — and to forget about the struggles.
"We've got another chance, it's not done yet," McNeill said. "We've spent a lot of time talking about mental toughness and resiliency over the last four years, so I think that will help us bounce back."
In other quarter-final games, the Czech Republic beat Japan 53-47, Turkey defeated Argentina 72-58 and France topped Korea 80-63. The winners all locked up Olympic berths and will not play on the weekend.
Japan will meet Korea in the other game Saturday. The final game is scheduled for Sunday with the winner earning the final Olympic berth.