The transfer is subject to a medical examination for the former Sporting and Barcelona man, who has been at Benfica for six years.
The 27-year-old Benfica captain, who can play both on the wing and in a more central role, had been targeted by Liverpool for the last few seasons but, after the purchases of Fernando Torres, Andriy Voronin, Ryan Babel and - in particular - right winger Yossi Benayoun, are not in the market for such a player.
The move has signalled the end of Martin Petrov's stay at Atletico, the Bulgaria winger sold to Manchester City for £4.7 million on the same day.
La Liga
Drenthe keen to make Madrid move
06/08/2007 AT 19:58
Simao joins Diego Forlan, Luis Garcia, Raul Garcia and Kleber Santana as new summer signings for Atletico, who finished seventh last season and must overturn a 2-1 deficit to Romanian side Gloria Bistrita to qualify for the UEFA Cup.