The 31-year-old has joined Real Betis on a one-year contract.
Isco had been clubless since terminating his contract with Sevilla in December last year.
Isco only made 19 appearances, scored one goal and provided three assists for Sevilla but grew disillusioned at the club after manager Julien Lopetegui was sacked and he ended his stay with the Andalusians four months into a two-year contract.
Isco is the fifth arrival at Real Betis this summer after deals for Hector Bellerin, Marc Bartra, Ayoze Perez and Marc Roca were also struck.
Isco previously spent nine years with Real Madrid, whom he joined from Malaga in the summer of 2013 and won among other honours five UEFA Champions League trophies, three La Liga titles, one Copa del Rey and three UEFA Super Cups.
His move to Real Betis, who will play in the Europa League next season, see him reunited with manager Manuel Pellegrini after they worked together at both Real Madrid and Malaga in the past.
