The 36-year-old was initially issued the punishment for controversial chants he made after Croatia qualified for the finals in Brazil with a play-off victory over Iceland in November.
Using a microphone to address fans in Zagreb, Simunic shouted: "For the homeland". In response to Simunic's call, the fans replied: "Ready!"
The call was used by the Croatian pro-Nazi puppet regime, the Ustashas, who ruled the state when thousands of people were killed in concentration camps during World War II.
Simunic appealed the ban, which is likely to see his international career come to an end, but on Wednesday FIFA rejected the appeal, releasing the following statement:
"The FIFA disciplinary committee has suspended Simunic for 10 official matches, the first of which have to be served during the final competition of the 2014 FIFA World Cup in Brazil.
"(He) is banned from entering the confines of the stadiums for those 10 matches and also fined CHF 30,000 (€24,600)."
