The Spanish starlet, who is wanted by the Premier League runners-up, insists he would only move to a club to play regular football
The Spain international is one of Manchester City's priority signings as the Premier League runners-up plan a £120 million spending spree this summer.
The 21-year-old has not ruled out a move to the Bernabeu but claims he does not want to become a bit-part player at his next club.
"The interest of Madrid is an honour," Isco told AS.
"What if my desire is to play for Madrid? I'll have to wait for the future but I am calm. There is interest from Madrid, but I'm focused on the [Under-21] national team.
"Madrid are one of the best, if not the best. I do not close my door but my priority is to play and I do not want to be on the bench. "