"Disciplinary proceedings have been opened," a FIFA spokesman told AFP, declining to make further comment on the player's case.
It was not clear what penalty Simunic could face.
But various football authorities have adopted an ever-tougher stance against far-right displays, with Greece youth international Giorgos Katidis this year earning a life ban from his home federation for a Nazi salute -- although he has since resurfaced at Novara in Italy's second tier.
Following Tuesday's 2-0 home win against Iceland that saw them advance from their World Cup qualifying play-off after a goalless first leg, Simunic took over a microphone at the Maksimir stadium in the Croatian capital Zagreb.
He shouted "za dom" -- Croatian for "for the homeland" -- four times. In response, fans chanted "spremni", meaning "ready".
The chant was used by Croatia's World War II Ustasha regime, allied to Nazi Germany, which killed hundreds of thousands of Serbs, Jews, anti-fascist Croatians, Roma and others in concentration camps.
Simunic argued that he was motivated purely by his love of the Croatian nation, denying any political intent and saying the emotion of the moment was the only reason.
The 35-year-old Dinamo Zagreb captain was born to Croatian immigrant parents in the Australian capital Canberra.
Football is highly popular in Australia's Croatian-origin community.
