Rather than think of it as "Croats targeting Serbs," it's better to treat it as the Ustasha--a homegrown fascist movement in Croatia--targeting ethnic Serbs within the Independent State of Croatia (including most of modern day Croatia and Bosnia Herzegovina).

Now, I'm not trying to shift the blame away from Croatia/Croats by saying "let's look at just the fascists and let everyone else off the hook." The Ustasha were 100% a homegrown movement and a thoroughly Croatian phenomenon. To talk about them as "the Croats," however, is very problematic since the Ustasha did not have significant pre-war support among the voting population, and only gained direct power as a collaborating government in cahoots with Nazi Germany.

Okay, on to the details! The Ustasha under Ante Pavelic's leadership crafted their own racial theory akin to Nazi racial eugenics. For the Ustasha, however, the main racial enemy was not the Jews (although they too were targeted in Ustasha propaganda subject to expulsion and genocide within Croatia). Instead, it was the Serbs. Why? For the Ustasha, the Serbs represented a biological threat to the Croats because, while they were also South Slavic, they had been biologically corrupted by Turkish blood due to decades of Ottoman occupation AND had been morally corrupted by their cultural ties to the Orthodox Church and the more "barbaric" Eastern Europeans.

Sounds a bit odd considering the Croats were also South Slavic, no? Well, while the Ustasha technically recognized their Slavic roots, they pushed HARD to revise their national history in such a way to place them firmly within Central European trends and NOT Eastern European trends. The reasons for this are complex and deep (a good amount of this having to do with Enlightenment era stereotypes about Eastern Europe being an intermediate and barbaric zone between civilization and savagery) but the main reason was that fascist eugenics theory understood Slavs to be the lowest European "race" above only Jews and Roma. By emphasizing their Central European (and Catholic!) roots, therefore, the Ustasha sought to separate Croats from their Slavic brethren by arguing they were *racially* different than Eastern European Slavs.

Now this all probably sounds absurd... because it is. But it was precisely this racial ideology that pushed the Ustasha towards an attempted genocide of their Serb population. Like the Nazis, they understood the Croat nation to be a biological entity that was *physically and morally* weakened by the presence of inferior blood. The Ustasha therefore argued that extermination of the biologically corrupt Serbs--fellow South Slavs or not--was necessary to “purify" the nation. There were myriad other reasons why Croats / the Ustasha resented ethnic Serbs going back to the politics and history of the 19th century and the Kingdom of Yugoslavia. But none of those sources of tension (in my not-so-humble opinion as a Yugoslav historian) can explain the Ustasha's attempted genocide of their ethnic Serb population.

I'm writing this in a rush so I definitely simplified some things! I'm happy to expand on anything, answer any further question, or provide some recommended readings.

Edited to fix formatting.