The Spain and Real captain found himself playing second fiddle to Lopez after the latter's arrival from Sevilla, amid a widely reported bust-up between Casillas and then manager, Jose Mourinho.
Carlo Ancelotti has since replaced the Portuguese at the Bernabeu, possibly giving Casillas a chance of returning to the first team this season, and Isco has backed the 32-year-old to come straight back in.
"They are both keepers that have proven themselves to be huge talents over their careers," the former Malaga man said.
"Diego was fantastic last year, and, for me, Casillas is the best in the world, having won everything in recent years.
"I think it's great that there's such healthy competition between the posts."
Madrid ended last season empty-handed as they fell well short behind Barcelona in La Liga, suffering defeats to Borussia Dortmund in the UEFA Champions League semi-finals and Atletico Madrid in the Copa del Rey final.
Isco is determined to help his new side get their hands on silverware this term, and is confident of a productive campaign in the Spanish capital.
He said: "I've been surprised by the level of humility and the desire to keep winning. That's important when it comes to conquering lots of titles.
"I think the team looks good. The pre-season has gone very well. We've been improving game after game and we can't wait to get down to business now.
"On a personal level, I'm really looking forward to playing my first game at the Bernabeu and starting with a win, which is very important.
"We want to do our best in every competition, not just the Champions League. We want to aspire to win everything we go in for.
"I haven't been following Barca at all during the pre-season. I'm only focusing on what we are doing, which is what's important."
