The Brazilian, who spent last year on loan at the Vicente Calderon, is said to be unhappy at the Volkswagon Arena following a poor start to the season.
Jose Maria Martin, Diego's representative, said that the 27-year-old's father has already been in contact with the La Liga outfit.
"Diego's father has received a call from Atleti," he told Spanish TV show Punta Pelota.
"Wolfsburg are having a dreadful season and have fired [former coach Felix] Magath.
"At Christmas, or at the end of the season, Diego could sign for Atleti. His family like the idea."
Diego has scored one goal in eight league appearances this season.