The Frenchman likened them to last season's finalists Borussia Dortmund, saying that they have the quality to become one of the prominent names in the latter stages of the competition.
"Atletico Madrid can be one of the surprises of the Champions League," Wenger told Eurosport.
"They can repeat what was does last year by Borussia Dortmund. They're a very good team with a lot of quality in every area of the pitch.
"They have many good players - especially Diego Costa who is a top predator and can score from any position."
Atletico have won both their games in Group G this season and also have a perfect record in La Liga, having won all eight matches.