Hadlee was in Dunedin to attend a farewell function at the town hall for the Otago team bound for India to compete in the Champions League twenty/20 tournament next month.
He said the shortest format of the game had its place but he worried it could encroach on test cricket.
"As a purist and a traditionalist, we must protect test cricket," Hadlee said.
"There is a danger the game becomes saturated and obsessed with twenty/20 cricket. The point is kids are going to see so much of this that all they'll want to do is play it.
"There is no way twenty/20 will prepare you for the real game. Twenty/20 cricket is not real cricket."
Hadlee, who took 431 wickets in 86 tests for New Zealand, said twenty/20 was part of the game's evolution, and was popular.
But with players able to earn big money in tournaments such as the Indian Premier League, the concern was those players would choose to compete in twenty/20 tournaments rather than for their country.
"To be fair, the majority of players still feel test cricket is the game to play. And, at the end of the day, international cricket gives you the opportunity to earn a reputation to pick up all these other asides.
"The ICC [International Cricket Council] have to be very careful in how they balance the game so that all forms of the game can co-exist."
Hadlee said there was talk in India of expanding the IPL from 56 to 90 games, adding two teams and extending the six week-long tournament.
If those plans went ahead, more pressure would be put on the international schedule and on international players wanting to maximise their earning potential and continue playing for their country.
He was also concerned the rise of twenty/20 could contribute to a drop-off in form by top-class cricketers, who were playing too much cricket in their desire to compete in the game's three formats.
The skills required to play twenty/20 or one-day cricket differed markedly from those required to be successful at test cricket.
Playing all three created confusion and bred mediocrity, he said.
"You can't expect top-class players to perform in all three but they are going to want to get out there for the pay packet."
