Yes, it is permissible to marry the sister of one's former wife, on condition that the ‘iddah of the first wife has ended. The evidence for that is the verse (interpretation of the meaning):
“Forbidden to you (for marriage) are: … and two sisters in wedlock at the same time”
It was narrated that ‘Ubaydah al-Salmaani said: “The Sahaabah did not agree on anything so unanimously as they agreed upon four (rak’ahs of Sunnah prayer) before Zuhr, and that a woman should not be taken in marriage during the ‘iddah of her sister.”
The prohibition applies when the marriage is still in effect, but now the relationship with the first wife has ended through divorce (talaaq).
And Allaah knows best.
See al-Mughni, 7/68-69.