During the Croatian War of Independence, Modrić and his family lived in the village of Modrići near Obrovac but they were forced to flee the area when he was 6 years old. His father, Stipe, was in the Croatian army, and he lost his grandfather in the fighting while his family were refugees, living in a hotel "Iž" in Zadar. It was in these difficult circumstances that Modrić began playing football. When his father returned from the army, he used the little money the family had to enroll his son in the local sporting academy. After displaying some talent, Luka signed with Dinamo Zagreb as a 16-year old in 2002.[2]

After a season with Dinamo Zagreb's youth side, he was loaned out in 2003 to Zrinjski Mostar in the Premier League of Bosnia and Herzegovina. During this spell, he established his versatile style of play and became the Bosnian and Herzegovinian League Player of the Year while still only 18 years old.[5] He later claimed that "someone who can play in the Bosnian league can play anywhere", referring to its physical nature.[5] The following year, he was again loaned out, this time to Inter Zaprešić in his home country . He spent one season with them, helping the team to achieve 2nd position in the Croatian first league,[6] and a place in UEFA Cup (now Europa League) preliminary round, as well as being awarded the Croatian Football Hope of the Year award in 2004.[7] He returned to Dinamo Zagreb in 2005.[5]