Goalkeeper Casillas, Real’s captain, was dropped in December and has spent much of this season on the bench.
“In September, they were touting him for the Ballon d’Or. Now it’s like he’s dead wood,” Xavi said of his friend.
Barcelona midfielder Xavi, 33, won two European Championships and the 2010 World Cup with 31-year-old Casillas.
Madrid defender Pepe has also expressed his regret at the way Mourinho has handled the decision to drop Casillas.
Casillas and Xavi – joint honours
- 1999: World Youth Championship
- 2008 & 2012: European Championship
- 2010: World Cup
Reports emerged earlier this year that the former Porto, Chelsea and Inter manager had clashed with both Casillas and defender Sergio Ramos.
And, stemming from Mourinho’s treatment of the pair, there have been several reports of in-fighting between the coach, his playing staff and some club directors.
Pepe, 30, called Casillas an “institution in this club and in Spain”.
The Portugal international has joined Casillas on the sidelines in recent weeks, with Mourinho preferring 20-year-old centre-back Raphael Varane.
After comfortably winning La Liga last season, Mourinho has come under scrutiny this term, with Barcelona regaining the title.
Mourinho has also been linked with a possible return to Chelsea.