Jurgen Klopp's side stand between Los Blancos and a third consecutive Champions League title after the Reds claimed a stirring semi-final triumph over Roma.
Zinedine Zidane's team are favourites heading into the clash in Kiev on May 26, but Isco is not taking anything for granted.
"It is going to be a very beautiful final," Isco said.
"It is the most important tournament at club level and Real Madrid are the kings of Europe and we have the opportunity to claim it again after a season where we have not done well in the league and cup.
"It would be a good way to finish the season.
"It is true that at the beginning they were not among the favourites, but Liverpool have shown they deserve to be in the final.
"They have a great coach and strong players who make the difference in the attack.
"We are in the final for another year and it is very important to continue at this high level. Both the players and the fans are very excited."