The Spanish international has scored 34 times in all competitions this season, with that run of form helping Atletico into the semi-finals of the Champions League and top of the La Liga table.
While Simeone believes that his leading scorer can improve, the Argentine has backed the forward to be "among the candidates" for next year's Ballon d'Or.
"Costa has room for improvement. He's rebellious and I like that. Hopefully he doesn't stop growing," he told Onda Cero.
"It depends on what he wants to do. Today, he's among the candidates for the Ballon d'Or."
Costa is currently nursing an injured leg, but is expected to be fit for Friday's La Liga clash against Elche.