World Cup winner Xavi, 39, said Barcelona’s director of football Eric Abidal made him the offer, before settling on Quique Setien to replace Ernesto Valverde as coach.
“I received an offer from Barcelona in the presence of Eric Abidal… but I did not agree to this offer, especially as it is too early for me to coach Barcelona,” he said in a statement issued by Al-Sadd.
“But it will still be my dream to coach the team in the future.
“I love the new Barcelona coach, I love the way he works, and I expect him to succeed with the team.”
Valverde left Barcelona after his sacking on Monday, closing the page on a brutal few days.
Barcelona confirmed Setien’s appointment following a board meeting that lasted more than four hours on Monday.
His contract runs until 2022 although there is a break clause in 2021, to allow for change after the club’s presidential elections.
Valverde is the first coach to be sacked by Barca mid-season since Louis van Gaal in 2003.
Barcelona sit top of La Liga, albeit level on points with Real Madrid, and face Napoli next month in the last 16 of the Champions League.
Xavi came through the Barcelona academy before breaking the record for most appearances for the senior side, winning four Champions League trophies and eight La Liga titles.
He joined Al-Sadd as a player in 2015 before being appointed coach last July.