The Brazilian spent the 2011-12 season on loan at los Colchoneros, scoring three times in 30 La Liga appearances, and, in an interview with AS, was in no doubt about the importance of Turan to the side.
"He's playing perfectly," said the 27-year-old midfielder.
"He's a very creative player, of which there are many. Arda should continue at Atletico. If he leaves, I think he would be making a mistake."
Turan has previously been linked with a possible move to Liverpool or Arsenal, with earlier speculation suggesting that only a club from the English Premier League or Russia would be able to afford the playmaker's €24 million (£19.5m) minimum fee release clause.
The player himself has stated that he would relish playing in the Premier League, and is a self-confessed fan of Liverpool - who have fellow-Turkish star Nuri Sahin on loan for the season from Real Madrid.
|14/1||Mansfield are 14/1 with William Hill to beat Liverpool this afternoon
However, it remains to be seen whether the Reds or the Gunners would be willing or able to meet the financial terms likely to be demanded by Atletico, Turan and his agent should transfer talks be initiated. Diego may therefore get his wish of seeing his former team-mate stay in Madrid.
Diego also spoke fondly of his own time in the Spanish capital last season and praised los Rojiblancos' performances so far this campaign which have seen them occupy second place in La Liga, seven points clear of Real Madrid.
"The team are doing phenomenally this season. They are outdoing almost all their rivals in the league standings and should continue to do things well."
The Brazilian was also very clear about his own future at Wolfsburg where he has scored six times so far this campaign.
"My only reality is my club, Wolfsburg," he added.
"I've heard things about an alleged Galatasaray interest in me, but I cannot think of a transfer during this window.
"I have a contract with Wolfsburg and this is where I belong."