Sacchi, who won back-to-back European Cup titles with AC Milan and led Italy to the World Cup final in 1994, has come under fire after speaking at an awards ceremony in Tuscany.
"I'm not racist and my history as a coach shows that, but watching at the Viareggio Cup makes me think there are too many colored players," Sacchi was quoted as saying by the Italian newspaper La Gazzetta dello Sport.
The Viareggio Cup is an important Italian youth tournament.
"Business interests now come first. Italy has no dignity, it has no pride: you shouldn't have squads including 15 foreigners," added the 68-year-old in the Gazzetta interview.
When contacted by CNN the former director of football at European champions Real Madrid explained: "It's the media -- some of them, not all of them -- which are always looking for scoops.
"There's nothing I have to clarify, if there is ignorance and bad faith you can't clarify."
Sacchi's successive European triumphs with AC Milan in 1988 and 1989 were completed with a team for whom black players Frank Rijkaard and Ruud Gullit were instrumental.
He pointed to the Dutch pair as proof that he wasn't racist when clarifying his comments but reiterated his belief there were too many foreign players in Italy.
It's a widely held belief in football that the more overseas players there are in a league the less likely it is a country's national team will be successful on the international stage.
Italy last won the World Cup in 2006 and failed to escape the group stages at the 2010 and 2014 events.
According to the respected CIES Football Observatory
-- specialists in statistical analysis for football -- Italy has seen a bigger spike in overseas players than any of Europe's other big leagues since 2009.
In an article published in November 2014, it said the percentage of non-Italian nationals had risen from 42.4% to 54.8%.
"I just said that we don't have the Italian pride, we are losing our identity. I was watching a match today and I saw four black guys in a team," Sacchi told CNN.
"They weren't labeled as foreigners, they were guys. I am 68, I have a 40-year history. Thirty years ago I made (Ruud) Gullit and (Frank) Rijkaard play, when you weren't even born. What do you want?
"It's not a matter of color. I think the problem is having too many foreigners."
Sacchi left his role as technical coordinator of youth development with the Italian Football Federation (FIGC) in July after four years, citing stress as the main factor.
"I am leaving behind an assignment which I care a lot about, but I have a terrible adversary -- one I was able to manage for 22 or 23 years but that is now winning the battle -- and that is stress," he said on the FIGC's website at the time.
When contacted by CNN, the FIGC said it would not be commenting directly on Sacchi's remarks given he was no longer an employee.
But Diego Antenozio, from the FIGC, said: "Our engagement against racism both inside and outside the pitch is transparent and consistent.
"I can firmly state that the FIGC believes and operates before the FIFA Regulations and Statutes, aims to include people without any sort prejudice and by granting everybody the opportunity to practice football beyond any race or gender as you can understand from this whole story."
Sacchi's five-year stint in charge of the national team saw him guide Italy to its first World Cup final in 12 years when it faced Brazil in the 1994, only to lose on penalties.
As well as his storied stint at Milan, Sacchi also had two spells at Italian club Parma and coached current Spanish champions Atletico Madrid.
This is the latest in a line of incidents involving race to cloud Italian football.
Last year world football's governing body FIFA banned the current FIGC president Carlo Tavecchio for six months after he referred to African players as "banana eaters."
The 71-year-old waded into the debate that followed Italy's disappointing performance at the 2014 World Cup and said there should be more stringent criteria for foreign players to operate in Italy's leagues.
Tavecchio was running to become president of the FIGC when he made the comments and though several Italian clubs withdrew their support, he was elected with 63% of the vote.
UEFA also banned Tavecchio for six months but though the FIGC investigated his remarks it decided not to take any disciplinary action.