The 41-year-old's exit from Qatari side Al-Sadd was negotiated last week before he was confirmed as Ronald Koeman's successor over the weekend.
Xavi returns to Camp Nou after playing 767 games for the club in a trophy-laden 17 years, and Iniesta feels that his introduction is exactly what the Blaugrana need.
Speaking to beIN Sports, Iniesta said: "He's ready - he's been preparing and he's capable. He's a perfect fit, that's for sure. Not just because of what he may know about La Masia or the club, but because he's ready for it.
"It's important, not just because of what he represents as a player but as a coach. He is ready to face this challenge.
"I wish him all the luck in the world and I am convinced that he will be fine because he has prepared for this moment and is very excited to be able to take on this challenge. I hope that the circumstances arise for him to be successful. I wish him the best."
Xavi took charge of 91 games for Al-Sadd before leaving for Barcelona, winning 62 of them and delivering one league title.