The Europa League winners make their third signing of the summer, securing the 32-year-old defender from cross-town rivals Getafe for the next two seasons
The experienced Argentine has put pen to paper on a two-year contract at the Vicente Calderon, and seemingly ends the capital club's search for defensive reinforcements.
Diaz, who has been capped 12 times by Argentina, joined the Azulones in a €4 million deal from Boca Juniors in 2007 and went on to make over 160 Liga appearances in a five-year spell.
He represents Atleti's third arrival of the summer, following the previous captures of Cristian Rodriguez and Emre.
Despite a disappointing start to the season under Gregorio Manzano, his successor Diego Simeone took over in December and lead the side to an impressive fifth place and a second Europa League title in three years.