Torres has endured a torrid stay at Stamford Bridge since joining from Liverpool in January 2011 for £50million.
In 74 league games he has scored just 14 times, which is a shadow of his Liverpool form where he hit 65 goals in 102 Premier League appearances.
The 29-year-old began his career with Atletico Madrid and is still revered by their fans, and now Simeone has refused to rule out a possible return.
"Fernando Torres is currently playing for another team. We have to wait for the season to finish and decide which of the available players could come here and do a good job," Simeone told Onda Cero.
"Fernando knows about the club's history, what it means to play here and I don't need to speak about his ability.
"We were team-mates. I know how important he can be."
Simeone admits he does not know if a deal could be struck, adding: "It's complicated. I wouldn't like to say yes or no. He's a player who always performs and we have to respect his choice."
With Chelsea being strongly linked with Atletico's Radamel Falcao - a player-swap plus cash deal has long been mooted.
Simeone was also quizzed about the future of the Colombian, and said: "I'm not Falcao and I'm not his agent. I'm the manager and have the utmost respect for him, because he gave me so much at River Plate and has done the same here.
"He always gives his all and I really respect players who do that. But everyone makes their own decisions in life. Every person is different, and we have to respect each other. Those who stay are always going to be the best."