Ramos, a World Cup winner and two-time European champion with Spain, has admitted he would interested in representing La Roja in Tokyo.
"It's a very nice idea," he said last year. "Nobody could say no. We'll see what happens. I'm emotional every time I pull on a Spain shirt."
The 33-year-old will be in action at Euro 2020 this summer, but could yet be one of three players over 23 years old named by Spain coach Luis de la Fuente for the Olympics and Zidane gave his captain the green light on Friday.
"If he wants to, I'll support him," the Frenchman said. "It's very special to play for your country and especially a player like him, with all he has done."
Meanwhile, Madrid are reported to be preparing a new contract for the central defender, whose current deal is up in 2021.
"I think it's good," Zidane said. "I always wants Sergio with me, with us."
Ramos has never been a substitute under Zidane and the Frenchman was asked why in his press conference.
"That's a good question," he said. "The most important thing is that Sergio is our captain, our leader, our reference. He plays better that way. Him being on the bench is in nobody's interest.
"I have to make decisions. He is very important for all the players."
Zidane was praised in an interview with AS on Friday by Manchester City's Raheem Sterling, who left the door open for a possible move to Madrid in future.
But, asked if he would fit in, the Frenchman said: "I don't know. I can't talk about a player who isn't mine."