The 29-year-old only joined the Champions League finalists in January, but after signing a short-term contract he is available for a free in just a few months’ time.
This has alerted Wenger, who is keen to bolster his options in the coming off-season.
Diego was once heralded as one of the world’s top emerging playmakers, but a series of injuries and a dip in form after a big move from Werder Bremen to Juventus in 2009 saw has career falter.
He has since got back on track, and has been relatively impressive for Atletico – this is now his second spell as the Vicente Calderon – netting a stunning effort in their Champions League quarter-final tie against Barcelona.
As a free signing, Wenger sees the 33-time Brazilian international as a low risk addition, and the sort of player who can challenge the likes of Mesut Ozil and Santi Cazorla for a starting berth.
However, Atlctico may move to tie him down to a longer contract once the season ends.
Diego is also wanted by teams in his homeland.