Loftus-Cheek, 21, was named the man of the match after a confident performance in midfield against Germany at Wembley, while a back injury cut short his second England appearance against Brazil.
The Chelsea academy graduate made 32 appearances for the Blues after making his senior debut for the club in December 2014 and was sent on a season-long loan to Palace in July.
Willian said Loftus-Cheek had the quality to play for the Chelsea first team and urged Blues officials to recall the midfielder to Stamford Bridge.
"He's a very good player. He is strong, he has quality. He has a great future," the Brazilian winger was quoted as saying by Sky Sports.
"I don't know why he is at Crystal Palace now. I don't know why. He has to come back."
Willian's comments come after England manager Gareth Southgate claimed that Loftus-Cheek's development had slowed as a result of competing with senior players who feared to lose their places.
Meanwhile, the 21-year-old's father accused Jose Mourinho of holding back his son's career when he was the manager at Chelsea.
"Jose Mourinho held him back," Trevor Loftus-Cheek told the Daily Mail. "He should have been playing. Everyone behind the scenes was asking, 'Why isn't he playing?' If Ruben was playing for Mauricio Pochettino, he'd have 70, 80, 90 first team appearances by now."
Willian was introduced as a late substitute for Brazil against England at Wembley and said he was impressed with the quality of Southgate's team.
"England are a very strong team with young players, quality players. It was difficult for us to find spaces because they had a lot of players behind the ball," he said.
"England always have good and strong players. They can improve a lot, like us. I think they can do that."