Modric's fierce first half volley was enough to secure all three points for a Croatia side which hit the woodwork twice and dominated its opponent all afternoon.
It is eight years since these two teams played out a thrilling quarterfinal tie in Vienna -- a game which Turkey won on penalties having equalized in the final minute of extra-time.
Croatia, which had taken a 1-0 lead in the Euro 2012 tie in the 119th minute, appeared to have qualified for the semifinals of the competition through Ivan Klasnic's effort.
But as it celebrated what looked to be the winning goal, Turkey stunned its opponents by equalizing just seconds later to force penalties.
Modric and Ivan Rakitic missed for Croatia and Turkey keeper Rustu Recber saved the deciding kick from Mladen Petric to earn his side victory.
However, on this occasion there was no great escape for Turkey as Croatia held out for a deserved victory.
And yet it may have been a completely different story had Turkey, which had barely threatened in the opening half hour, converted its best opportunity of the contest on the half-hour mark.
Ozan Tufan found space in the middle and when the cross came in he sent a downward header straight at the goalkeeper when he appeared certain to score.
That miss was to prove costly as with four minutes of the first half remaining Croatia struck.
The Turkish defense cleared the ball as far as Modric and the Real Madrid midfielder watched the ball come down before arrowing an unstoppable volley into the far corner.
It was a sensational strike from a wonderful player although Volkan Babacan, the Turkish goalkeeper, might have expected to do rather better after allowing the ball to go under his arm.
Croatia continued to dominate after the interval and came close to moving further ahead when Darijo Srna, the country's most capped player, smashed a free kick against the crossbar from 20-yards.
Srna, the captain, then fired wide from inside the penalty while Marcelo Brozovic sent a fierce volley inches over crossbar as Turkey began to wobble.
Croatia, playing with a style and swagger, then hit the woodwork once again -- Ivan Perisic heading against the crossbar from close-range after meeting Mario Mandzukic's cross.
Turkey rarely appeared capable of finding an equalizer, although Vedran Corluka, boasting a large head bandage after suffering a head wound earlier in the contest, was forced into a dramatic late block.
This victory puts Croatia top of the table with defending champion Spain set to take on Czech Republic in Toulouse on Monday.
Croatia's next game is against the Czechs on Friday with Turkey taking on Spain later that day.
"Luka really deserves to be talked about, especially after this match," Croatia coach Ante Cacic told a press conference after the game.
"It was one of his best matches in Croatia's history. He was really playing well. He was really our leader.
"He scored a magical goal and at the end it was the only goal.
"We need Luka in this form. All the team looks better and more aggressive when he plays like that."