The 29-year-old midfielder has made just two starts for Los Blancos this season, amassing 342 appearances in total for the Spanish giants, scoring 52 goals in that time.
The most recent of those strikes came in a 6-1 thrashing of Real Mallorca last month, but a lack of a recent game time has been compounded by a back problem that ruled him out of Sunday's 2-1 defeat away at Espanyol.
Isco boasts an impressive haul of trophies in his career to date, which includes four Champions Leagues, two La Liga titles, one Copa del Rey and four Club World Cups.
Everton have been highlighted as the best option to continue his career, sparking hopes of a reunion with Rafael Benitez after the pair worked together at the Bernabeu.
The Toffees faithful would welcome a big-name player to bolster their squad after allowing James Rodriguez to move to Qatari side Al Rayyan, and Real Madrid are reportedly eager to make a sale rather than let the former Malaga man leave the Spanish capital for free next year, with his contract set to expire in June 2022.
The Spain international's versatility would be a huge plus for Benitez, after previously being deployed in central midfield, on the left flank, and in a more advanced number 10 role.
It is worth noting that there has been no concrete approach from the Merseyside club for the midfielder or that they will make a bid for him in the next window.
But a signing like Isco could take Everton to the next level and bring European football to Goodison Park for the first time in four years.
There are high hopes that the wait for European football could be coming to an end, after an impressive start to the season which has seen the Toffees amass 14 points from their first seven games.
Benitez's side showed they could mix it with the best after Andros Townsend earned them a 1-1 draw away at Manchester United on Saturday.
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