The capital club have since reacted to the news of Iniesta's exit from the game, citing his extra-time goal as Spain beat Netherlands 1-0 in the World Cup final in 2010.
A statement said that the club "would like to express their recognition, admiration and affection for one of the biggest legends of Spanish and world football.
"Andres Iniesta has enriched the sport through his football and his values, in addition to the numerous trophies he has won during his career. His iconic goal in the 2010 World Cup Final in South Africa will forever remain in the memory of every Spanish fan.
"Real Madrid would like to wish him and his family the best of luck in this new chapter of his life."