Los Blancos' inconsistent performances, coupled with the incredible start made by Tito Vilanova's side, has seen the champion fall well behind both Barca and city rival Atletico Madrid.
The former Blaugrana coach feels the gap between Spain's two biggest clubs is a remarkable one, telling reporters in Catalunya: "At this stage of the season Real Madrid being 16 points behind Barcelona can only be called a failure."
Madrid boss Jose Mourinho controversially dropped captain Iker Casillas for the recent 3-2 defeat to Malaga, and Cruyff suggested the move was based on more than just current form.
"You don't lose your place overnight," he said, when asked for his view on the contentious decision.
The 65-year-old was speaking ahead of the 1-1 friendly draw between Catalunya and Nigeria - his final match before calling time on his coaching career.