The coach spent two stints at Barcelona - for three years until 2000 and between 2002 and 2003 - and during those spells introduced the midfield duo into the first team from the youth squad.
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Xavi and Iniesta were crucial in Euro 2008, World Cup 2010 and Euro 2012, and remain prominent members of la Roja's setup, and Van Gaal believes his team's opponent has him to thank in part for its success.
"I have great memories of them," he told FIFA.com. "And that's first and foremost because these boys are also very kind human beings. They haven't forgotten me, that's for sure, because they're talking about me still. They have developed themselves fantastically well since we worked together and these boys - Iniesta, Xavi and the others - have for many years been the basis of this successful Barcelona side.
"So I am proud, and happy too, that I still have a good relationship with them. I saw these boys playing for Barca B and I brought them into the first team. This was the case with, for example, Victor Valdes and Pepe Reina. They developed into top goalkeepers, as you can see at the moment. But I also brought on Xavi, Iniesta, Carles Puyol, and we shouldn't forget Thiago Motta, who you now see playing for the Italian national team.
"They all played in the youth team at Barcelona, I picked them out, and they have developed very quickly and to a very high level."
Van Gaal also admitted that he was conflicted when Spain faced Netherlands in the World Cup final four years ago, as so many of Vicente del Bosque's men had been coached by him, and says he had been satisfied to watch la Roja win in extra time.
"It was a little bit double edged," the future Manchester United manager said. "Netherlands were there, but there were also five players in the Spanish squad that I trained and coached. In the Dutch squad, there was only Arjen Robben and [Mark] van Bommel.
"So you feel, well, maybe I have to support the Spanish team, although your nationality is Dutch and, in the end, that made my mind up. But when Spain won I was proud, that's for sure."
Netherlands faces Spain in Salvador on Friday before subsequent clashes with Australia on June 18 then Chile on June 23.