Costa's inclusion to the LaLiga side comes as a welcome boost ahead of their first leg outing of the UEFA Europa League semi-final at the Emirates tonight.
The former Chelsea striker will return to London for the first time since his acrimonious departure from Stamford Bridge and he arrives with a point to prove.
"Knowing Diego Costa, I think all of those apply to him," Simeone told reporters when asked if his inclusion is to intimidate the Gunners or boost morale.
"Both in England and in Spain, many teams have suffered at the hands of Diego Costa. Not just Arsenal. He has improved."
Costa has scored six goals and registered five assists in 18 games this season.