Atletico Madrid have signed midfielder Diego from Wolfsburg for a reported 1.5 million euros.

The 28-year-old, whose contract with the Bundesliga club was set to expire in the summer, had long been linked with a return to Atletico -- where he spent a successful season on loan in 2011-12.

There had also been strong signals that the Brazilian would return to former club Santos on a free transfer at the end of the current campaign. However, he has instead opted for a move to the Spanish capital.

“Atletico got in touch with us yesterday [Thursday] evening,” Wolfsburg sporting director Klaus Allofs told kicker. “We considered the pros and cons. Selling Diego is a bit of a step back for us.”