Isco has been strongly linked with a sensational move from Madrid to Barca, with his contract due to expire in 2018 and talks over a renewal on hold until the end of the season.
Reports in Spain this week have suggested Barca would pay the 24-year-old a huge signing-on fee if he ran down his deal at Santiago Bernabeu and then moved to Camp Nou on a free transfer.
And Iniesta, who is with the Spain squad for the games against Israel and France along with Isco, praised his international team-mate's quality.
"He is a fantastic player, with an incredible talent," Iniesta told reporters.
"For many years he has been doing things very well and he is playing for one of the best teams in the world.
"He is an important player not just in the national team but in his club. He is young and has many years to grow and improve."
Suarez, meanwhile, feels Isco would be a welcome addition to Barca but urged caution with any deal still a long way from coming to fruition.
"Of course I would like to have Isco as a team-mate, all good players are welcome in our team," he said to Cadena Ser.
"Isco has an incredible talent but right now he is under contract with Real.
"We have to wait and see what happens. If he doesn't sign a contract extension, then we can talk."
The last player to move directly from Real Madrid to Barcelona was Luis Enrique in 1996, while the likes of Luis Figo and Javier Saviola have moved in the opposite direction.
Isco has only started 13 LaLiga matches this season and has suggested he may have to leave Madrid to get more minutes, despite being happy at the club.