The Spain international was left out of Real's starting lineup for the clash at the Bernabeu and did not leave the bench as the La Liga champions were humbled in El Clasico.
Isco had been warming up with Marco Asensio and Gareth Bale after Barca took the lead early in the second half through Luis Suarez, but head coach Zinedine Zidane brought on Nacho Fernandez when Dani Carvajal was sent off for a deliberate handball and Lionel Messi gave Barca a two-goal lead from the penalty spot.
A report from Spanish outlet AS claimed that Isco stopped warming up and headed back to the bench after the decision to bring on Nacho, with Zidane later turning to Bale and Asensio in a bid to snatch a result before Aleix Vidal added a third goal for the visitors.
Isco, however, has taken exception to the suggestion, writing on Twitter after the match: "Stop spreading shit, my two teammates were about to come on... I didn't know we could make four changes."
Dejar de meter mierda que ya iban a salir mis otros dos compañeros... no sabía yo que sé podían hacer 4 cambios https://t.co/CFnYgNZcbM— ISCO ALARCON (@isco_alarcon) December 23, 2017
The defeat leaves Madrid fourth in the La Liga table and 14 points behind leaders Barca, although Los Blancos still have a game in hand.