With the departure of James Rodríguez to Bayern Munich, Modrić inherited the team's coveted number 10 jersey for the new 2017–18 season, replacing his previous number 19 jersey. In December, he won the 2017 FIFA Club World Cup with Real Madrid and received the Golden Ball award as the best player of the competition for his performance. His first goal of the season came in a 7–1 win over Deportivo de La Coruña on 21 January 2018. In the same month was for the second time included in the UEFA Team of the Year (2017). Modrić was a regular starter when Real Madrid won the 2017–18 UEFA Champions League, starting in the final victory against Liverpool which saw Madrid win their third consecutive title. For his performances throughout the campaign, Modrić was included in Champions League team of the season for the third consecutive time. He later received the UEFA Club Football Award for Best Midfielder of the Champions League season for the second consecutive time. In July 2018, it was announced Modrić's Real Madrid jersey was the most requested jersey of the club after the departure of Cristiano Ronaldo to Juventus.
The arrival of new manager Julen Lopetegui in August 2018 saw Modrić given a steady return to the first team as a substitute due to his lack of pre-season training after the 2018 World Cup. This included a substitute appearance in his team's 2–4 loss after extra time against Atlético Madrid in the UEFA Super Cup. His first start of the season came on 1 September in a 4–1 home win against Leganés, in which he assisted his side's third goal, scored by Karim Benzema. His 100th appearance in the UEFA club competition came on 19 September in a 3–0 home win against Roma, in which he assisted the second goal, scored by Gareth Bale. On 22 December, Modrić won his third FIFA Club World Cup, scoring the first goal and assisting for the third in the final against Al Ain. On 13 and 19 January 2019, Modrić for the first time scored in two consecutive league games for Real Madrid, in a 1–2 away win against Real Betis and 2–0 home win against Sevilla. In the same month was included in the UEFA Team of the Year (2018) for the third time in his career. From 27 February to 5 March, Modrić went through what he described as "the most difficult week of his football life," with Real Madrid losing to Barcelona twice and Ajax and crashing out of Copa del Rey, title race and the Champions League, respectively. Despite having had an underwhelming season, for the fifth consecutive time he was included in the FIFA FIFPro World XI.
For Croatia's 2018 World Cup qualifying campaign, Modrić became the new team captain, following Darijo Srna's retirement. Croatia started the campaign well; however, following 1–0 defeats to Iceland and Turkey and a 1–1 draw with Finland (in which Modrić made his 100th appearance for the national team), Croatia seriously compromised their qualification for the tournament. This caused Modrić to publicly state his lack of confidence in coach Ante Čačić. Čačić was soon replaced by Zlatko Dalić ahead of Croatia's final qualifier against Ukraine away, which Croatia won 2–0 and won a place in the play-offs. Modrić scored a penalty in the 4–1 victory over Greece in the second qualifying round, enabling his team to qualify for the World Cup.
In March 2018, in an embezzlement and tax evasion trial against the former Dinamo Zagreb executive, Zdravko Mamić, Modrić was called as a witness. Throughout the mid-late 2000s, Modrić signed multiple contracts with Mamić to play at Dinamo Zagreb. Modrić annexed most of his Tottenham transfer fee to Mamić because he was the broker of the move and gave Modrić financial backing early on in his career. Despite stating in 2017 that he signed the annexe clause of the contract ten years earlier, in his testimony he stated that he signed it in 2004, the year of his first contract. Modrić was charged with perjury for stating that he annexed his fee at an earlier date than he allegedly had. Facing the judge, he said, "I came here to state my defence and tell the truth, like every time so far. My conscience is clear". The Croatian Football Federation stood behind Modrić, but a part of the Croatian public, frustrated with the corruption in Croatian football, perceived the alleged perjury as a defence of Mamić and became critical of Modrić. Some international news outlets praised him for dealing with the stress of his legal situation while performing with the Croatian team at the 2018 FIFA World Cup. In October and December 2018, the perjury charge was rejected by the Croatian courts.