The Portuguese has brought the club into disrepute with a number of controversial comments and ex-player Michel says he has now gone too far.
The Portuguese has courted controversy in recent weeks by firstly claiming January signing Diego Lopez is a better goalkeeper than the Spain N.o.1, before criticizing defender Pepe.
Those comments have sparked a media storm in Spain, resulting in the club canceling its press conference ahead of Saturday's clash with Espanyol.
"Whether you like him or not, Mourinho has always acted in the same way, to win all of his trophies. Maybe we used to be amused by him, but not anymore," Michel told Marca. "Madrid isn't doing itself any favors with everything that's been going on. I'm a Madrid fan, not a pseudo-Madridista, and that's the way I see it from afar."
Michel - who is now in charge of Greek giant Olympiakos and spent 14 years with los Blancos as a player, then offered his backing to Casillas.
"There are people in Madrid who are untouchable because they have earned it. Then it is the coach's decision. Diego Lopez is outstanding, but Iker Casillas is the best goalkeeper in the world without any doubt. That is my opinion."