Breen, 33, made his WRC debut in 2009 and clinched a career-best second place in last month's Rally of Sweden.
The Croatia Rally, the fourth event of the season, is scheduled to take place on April 20-23.
"Hyundai Motorsport is deeply saddened to confirm that driver Craig Breen today lost his life following an accident during the pre-event test for Croatia Rally," the team said.
"Co-driver James Fulton was unharmed in the incident that occurred just after midday local time.
"Hyundai Motorsport sends its sincerest condolences to Craig's family, friends and his many fans.
"Hyundai Motorsport will make no further comment at this time," it added.
The accident occurred near the northern town of Zlatar after the "driver's car slid off a road and hit a wooden pole," Croatian police said in a statement.
The cause of the accident was not immediately known.
Breen sat out the season-opening Rally of Monte Carlo in January as well as last month's Mexico Rally as he was alternating in Hyundai's third car with Spaniard Dani Sordo this year.
Last year, he finished seventh in the WRC's drivers' championship after finishing second in Italy and third in Monte Carlo.
The last WRC driver to die behind the wheel of their car was Augusto Mendes during the 1989 Portugal Rally on home soil.
Since then four co-drivers have lost their lives, most recently German Joerg Bastuck in 2006.
