Dortmund are a long way off the pace in the Bundesliga, but the Argentine fancies Jurgen Klopp's side's chances in Europe.
"I think Dortmund will win the Champions League," the 42-year-old coach told Marca.
The former Inter midfielder signed a contract to keep him in the Spanish capital until 2017 and says that he intends to stick around for the long term.
"I have renewed because I'm crazy. I've renewed hope. The contract is four years because our quest is to build a better Atletico Madrid."
Atleti are third in La Liga and have reached the final of the Copa del Rey where they will play Real Madrid.
Simeone then outlined his ambitions for the club and praised his players for their continued efforts.
He added: "These players are giving stability to the club. We need the club to generate more internal competition to sustain these four years.
"With our budget we're competing with the big boys and that is a credit to the players."