The Bayern Munich man has caught the eye in Germany's run to the semi-finals, often rushing from his line to sweep up behind his defence, as well as making crucial saves at times.
Neuer's shot-stopping ability was in evidence during the quarter-final against France on Friday when he produced a reaction save to deny Karim Benzema in the dying moments at the Maracana, having been untested for much of the game.
That stop preserved Germany's 1-0 advantage, and saw them progress to the last four of the World Cup for the fourth time in succession.
Kahn, who won 86 caps for Germany between 1995 and 2006 and claimed the Golden Ball at the 2002 finals in Japan and South Korea, believes Neuer has established himself as the greatest keeper in the modern game.
"He has proven at this World Cup that he is currently the world's best goalkeeper," said Kahn.
"Everyone knows that he is a wonderful footballer who can play really well.
"But what is crucial is that in important situations he can rescue the victory.
"That is ultimately what he will be measured by."
Germany face hosts Brazil on Tuesday in Belo Horizonte, with Argentina and the Netherlands contesting Wednesday's second semi-final in Sao Paulo.
