The 26-year-old playmaker is yet to start a match in the league since Santiago Solari replaced Julen Lopetegui at the helm, with reports suggesting the pair have a fractious relationship.
Isco was jeered during Madrid's 3-0 Champions League defeat to CSKA Moscow last week and appeared to respond with an angry gesture towards the crowd, though Solari claimed the player was simply claiming for a foul or corner.
Former Madrid player Sanz, who won La Liga and the Champions League with the club, acknowledged it is tough for players to consistently perform at the expected levels, but backed Isco - who has been linked with a January move away - to turn things around and prove his worth.
"I've met him but I haven't had the opportunity to talk to him very much. It doesn't surprise me because I know Real Madrid is very demanding," Sanz told Omnisport .
"But I am convinced he will reverse the situation. He is a very talented player, he has a great personality.
"I think he is a unique player. I think he will transform this issue in applauses because he is an important player for Real Madrid, for Spain and La Liga."
Sanz is confident Solari was the right appointment due to his knowledge of the club and is sure he will see out the season at the Santiago Bernabeu.
"I think it was the right decision. You need immediate results, so if you bring someone who doesn't know anything in the middle of the season it might affect that," he said.
"Given Solari had been a youth team coach for three years, a former player of Real Madrid, he knows the club. I think it was the right decision.
"I am convinced he will [see out the season]. Also, he signed a professional contract … I believe he will finish the season.
"It will be a complicated year, but I said before it will difficult for Real Madrid, Barcelona, Atletico [Madrid], for everyone. Now, all the games are more difficult. But, I think he will finish the season. I hope and wish he will do."