The Brazilian-born striker has starred in La Liga this season, scoring 10 goals and leading Atletico Madrid to victories in all eight of their matches.
Spain are currently engaged in a battle with Brazil for Costa's services, but the 25-year-old has made it clear that he would like to represent the current world and European champions.
And that is an acquisition that would delight Iniesta, who says that the forward would be welcomed with open arms into the national set-up, despite being born in Brazil.
Iniesta told Spanish radio station Cadena SER: "If Diego Costa can be here and the coach thinks he's fit – as a player he's showing that he's virtually unbeatable.
"If he comes, he'll be just another on the team. The player's performance is what makes you part of the team."
Iniesta also praised Swansea forward Michu and Sevilla defender Alberto Moreno after they were selected in Spain's 23-man squad for their FIFA World Cup qualifiers against Belarus and Georgia over the next week.
Neither player has been capped by the national team before but Iniesta has been impressed with what he has seen from the pair.
"I think (Michu and Alberto Moreno) are very good players to come into the group and they feel comfortable," he said.
"Their performances are what have brought them here and they can enjoy official matches. If they are here, it's because they've earned it.
"We're trying to make them feel as welcomed as possible."
The Barcelona star also spoke at length about the positive mood in camp, but insisted that their job – qualifying for the 2014 FIFA World Cup – was not done yet.
"The team is unique and that's what we enjoy and savour. We have very exciting challenges ahead of us," he continued.
"We've been together for a long time and the group feels good about being where we're at these days.
"We have to take the final step to Brazil (now). Things are going very well but we can't say we're done until we declare victory.
"Everyone has the hope of returning to Brazil. We're going to try to defend our title."
Spain will qualify for next year's World Cup if they beat both Belarus and Georgia.
