"He (Modric) is a fantastic player, great professional, top bloke. You can't replace him. You can sell him but you can't replace him with someone as good," said Redknapp.
"That's why the other clubs want to buy him - because he is worth the money. We don't want to sell him, we want to keep him.
"Once you start selling your best players you are finished. He's one of the better players in world football. He's an amazing footballer."
Modric and fellow midfielder Gareth Bale have been linked to several leading European clubs with British media reporting on Friday that Manchester City were interested in the Welshman.
But City manager Roberto Mancini said he doubted Bale would be sold by Spurs. "Gareth Bale is a fantastic player but I don't think he will leave a big team like Tottenham," he told reporters.
Redknapp also cannot understand why anyone thinks Spurs would want to part with their top players.
"I don't know why Tottenham should be seen as a club that is going to be selling its best players," he said. "We are certainly not looking to sell our best players. We are looking to build a team here, not dismantle.
"The chairman made a stance with Modric last year - the stance was that we are looking to build, to add to the group we've got and improve for next year, not to go backwards.
"If we go backwards, we're going nowhere basically are we? We will slump back into mid-table mediocrity and we don't want that."
With Roy Hodgson chosen as the new England manager this week instead of Redknapp attention has switched to the Tottenham manager's contract at the club which expires next year.
But the 65-year-old said: "I have never spoken to anyone about a contract. I have not chased (Spurs chairman) Daniel (Levy), and he doesn't have to chase me. I have a contract here still at the moment so there is no problem.
"I am pleased and privileged to be at a club like Tottenham. They are one of the top clubs in the country and in Europe. They are a great club to work for, so long may it continue."
Spurs travel to Aston Villa on Sunday looking for the win that will keep them in the top four and put pressure on third-placed Arsenal who they trail by a point.
The fourth-placed Premier League team will go into the Champions League qualifying round unless Chelsea beat Bayern Munich in this season's final on May 19.