Wolfsburg sporting director Klaus Allofs says that Atletico Madrid cannot reach the German side's asking price for Diego.
The Brazilian spent 2011-12 on loan at the Vicente Calderon and was eager to remain in Spain but the two clubs were unable to agree a fee.
And Allofs says the former Juventus playmaker will not be moving back to Atletico this summer.
"Diego has a price, but Atletico can't pay it," he is quoted as saying by AS.
"I can honestly say that we don't expect any serious bids from Madrid."
Diego first joined Wolfsburg from Juve back in 2010 and he enjoyed a fruitful 2012-13 campaign, finding the net on 13 occasions in all competitions.
His current deal at the Volkswagen Arena expires in June 2014.