Mourinho had been linked with a return to the Santiago Bernabeu to replace Santiago Solari, who was sacked following Madrid's Champions League exit at the hands of Ajax.
Former club chief Ramon Calderon revealed to Love Sport Radio that president Florentino Perez preferred Mourinho, who managed the club between 2010 and 2013.
However, senior figures in the club's dressing room forced the hands of Perez to open talks with Zidane - with reports claiming a mass exodus would have loomed including captain Sergio Ramos.
Mourinho, who was sacked as Manchester United manager in December believes Zidane's second tenure with show people 'how good he is', backing him to build on his treble UEFA Champions League and LaLiga successes.
"I think it's perfect with the fantastic things he's done in recent years," Mourinho told El Chiringuito.
"It's perfect for me, perfect for Madrid, perfect for him.
"It's a great opportunity to show how good he is, especially now with a new project. I think he's great."
His second spell kicks-off with a home tie against Celta Vigo on March 16 with Real trailing league leaders Barca by 12 points.