Diego Costa, 28, has been heavily linked with a move away from Chelsea this season.
Atletico and Chinese Super League club Tianjin Quanjian are reportedly interested in securing a move for the Spain international.
However, Costa ruled out a big-money move to China last week by admitting he would only be open to joining the La Liga giants should he decide to leave Stamford Bridge.
And Niguez has backed Costa to rejoin the club he left in 2014.
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If he can be signed, if he comes, Diego Costa would be well received.
Atletico Madrid star Saul Niguez
"If he can be signed, if he comes, Diego Costa would be well received," Niguez told Spanish outlet AS.
"He knows the place, we know him, and he would not take long to fit into the play of Atletico Madrid.
"Fernando Torres, Gabi, Koke show the values of Atletico Madrid, a family club, humble, hard-working.
"Koke could have earned much more money [at another club] but he prefers to be happy. When you are wearing the jersey that you love, and are getting playing time, in the end you value that much more than other things.
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Saul Niguez would welcome a return to Atletico Madrid for Chelsea striker Diego Costa
"I would give Fernando Torres a contract for life, not just as a player, but as an example for everyone.
"He is a very nice guy, really close to the fans, and has inside him the values of Atletico Madrid."
Costa scored 64 times for Atletico over three seasons before joining Chelsea where has won two Premier League titles.
He is contracted to the Blues until the summer of 2019.