Simeone's men face Barca at Camp Nou in the first leg of the quarter-finals in a meeting between two sides competing in an enthralling La Liga title race.
Atleti lead the way in Spain's top flight, but are just one point ahead of defending champions Barca - who they will play on the final day of the domestic season - with seven matches remaining.
The duo played out a goalless draw in the league back in January, and Simeone is expecting another tight contest as Atleti aim to reach the semi-finals of Europe's premier club competition since their run to the 1974 final.
"Barcelona is in top shape. They are used to these kind of matches," the Argentinian said.
"The match will be very difficult. The two teams meet in a great moment. I expect the best Barcelona, they will want to settle it here, in their home stadium and not wait for the return leg.
"If we say we are favourites, they will say that we are arrogant. If not, they will say that we are underdogs.
"What is certain is that we are going to compete and that it will be a beautiful tie."
Striker Diego Costa could well be crucial to Atleti's fortunes in the tie having scored 33 goals in all competitions for the Spanish capital club.
And Simeone believes that Costa is as important for Atleti as superstars Lionel Messi and Cristiano Ronaldo are for Barcelona and Real Madrid.
He added: "Diego Costa for us, Messi for Barca and Cristiano for Madrid, each in their own way with their style, are highly momentous for the teams."
