Bale, 23, has long been considered one of the hottest talents in the Premier League, often being linked with moves to both Madrid and rivals Barcelona.
And Modric, 27, who joined the Spanish champions from Spurs for £30 million in the summer, is hopeful of linking up with the Wales international once again.
"He should play for Real Madrid and I hope he'll come," he told BBC Radio Wales.
"It would be amazing and I think he can [play for Real Madrid].
"He's a good enough player."
Modric's words follow on from those of compatriot Davor Suker who earlier this week said he felt a move to the Bernabeu for Bale "would be the best move of his career".
Madrid and Spurs entered into a partnership, following the transfer of Modric, with both clubs agreeing to work together in respect of players, coaching and commercial relationships.
However, Spurs have denied the agreement allows the Spanish club to have first refusal on their players, such as Bale.