The 27-year-old arrived at the Bundesliga outfit in the summer of 2010 from Juventus, but was shown the door after just one season due a string of controversies and was informed that he would never play again for the Lower Saxony outfit.
However, he seemed to regain his form during 2011-12 where he moved to Atleti on a season-long loan, winning the Europa League in the process, but Sanz has now gone back on Wolfsburg's original stance and welcomed the midfielder back into contention.
"Should he return to us, Diego is a player we would have to play," Sanz told Bild. "His skills are unquestionable.
"I am sure he will be well received by the team as well."
Diego appears unlikely to remain in Spain after it emerged that Atleti are eyeing Schalke's Jose Manuel Jurado as a replacement for the Brazilian.