The Liverpool striker made an impressive return from knee surgery against England on Thursday evening, scoring either side of a Wayne Rooney tap-in to give his side a crucial 2-1 win.
Suarez has now scored 41 times in 77 games for la Celeste and Forlan believes he should be looked on in the same light as Lionel Messi, Cristiano Ronaldo and Zlatan Ibrahimovic."He is one of the best in the world," the 35-year-old said in an interview with AS.
"He is very good. There are some big attacking players and you can name Luis as one of them. He is alongside Messi, Cristiano, Ibrahimovic. All are huge and to choose between one or the other is a matter of taste.
"Without a doubt," he added when asked if Suarez, who has repeatedly been the subject of rumoured interest from los Blancos, had the class to shine at the club.
"I tell you - he is one of the best.
"He is a player who is in great physical and footballing condition and could very well play for Real Madrid."
Uruguay face Italy on Tuesday in a game that will decide which of the two sides will join Costa Rica in the last-16 and Forlan, whilst delighting in their win over the Three Lions, acknowledged that they were under pressure to perform against the Azzurri.
"It was all amazing," the Cerezo Osaka forward said of beating Roy Hodgson's men.
"You can not stop thinking about what we have already achieved by winning against England, because it is a party. This victory helped us to continue to have options in the next game. There are still three points to play for.
"We needed the three points [and to get them] against a great opponent like England was spectacular. We will live and see what happens from now."We have to go game by game. It is difficult to anticipate events. The important thing is to qualify and then see what happens."