Cacic was also economy minister and Prime Minister Zoran Milanovic's closest ally in the centre-left coalition cabinet which has tried to consolidate public finances and kickstart the economy before joining the European Union next July.
"Aware of my responsibilities to the state, the government and Croatian citizens, I am resigning from the government," Cacic told a news conference after returning from an investment trip in Qatar.
Cacic was driving on Hungary's main motorway in 2010 when he collided with a car in front of him. The impact injured two passengers, who later died in hospital.
He was given a suspended sentence in a previous ruling in June. Wednesday's ruling overturned that sentence.
Attila Vadocz, a court spokesman in the Hungarian town of Kaposvar, said the sentence was not open to appeal, adding Cacic could be released on parole after spending half of the 22 months in prison.
"He will be sorely missed in the government," Milanovic told the news conference, adding his successor will "probably be decided by the end of this week".
Milanovic's Social Democrats are in coalition with Cacic's Croatian People's Party, its junior partner.
"It might cause some problems because of his replacement, how long it might take, the balance of power," said a Western financial official, but added: "He was a strong man but investment is not a one-person game, so it is not necessarily a huge blow to investment policies."
Cacic had been tasked with kick-starting a major public sector investment programme in energy and infrastructure which the year-old government hopes will help economic recovery after four years without growth.
"This is all the more sensitive because he was in charge of the segment necessary for economic growth. I am somewhat worried about the government's future capacity," said Zagreb-based political analyst Davor Gjenero.
It was not immediately clear when Cacic will start his prison term but Vadocz said those convicted must generally start their sentences within one or two months of the ruling.
Cacic had acknowledged guilt but said he was briefly disoriented by fog on the road. He said the other car was driving too slowly and the passengers had not fastened their seat belts.