The defending La Liga champions suffered their second top-flight defeat of the season to Real Sociedad immediately before the international break, and host a Malaga side who are high on confidence on Saturday.
Javi Gracia's team have won their last five La Liga outings and sit just two points adrift of fourth-placed Atletico.
And Simeone knows his side will need to be at their best if they are to bounce back from their 2-1 reverse in San Sebastian.
"We have no room for error, we must treat the game like a final," said the Argentinian.
"They have been doing well for a while.
"We can see their results and we also know they stopped Barcelona playing well [in a 0-0 draw in September].
"They have a very strong offensive unit, much technical ability and experience on the pitch."
‘Even though it was late in the game, the Arsenal fans started singing my name. It felt like the moment I announced myself as a professional footballer’: Ex-Gunners star recalls scoring first senior goal as a teenager at Highbury
'I started to drive myself crazy': Former Manchester United midfielder explains why it all went wrong for him under Erik ten Hag
