The two were spotted getting quite close at a club in downtown, L.A., entertainment publication US Weekly magazine is reporting.
"They were kissing and grinding," a source disclosed to US Weekly.
The club where Valderrama and Kelly were hanging out has been identified as the West Greystone Manor Supper club in West Hollywood.
Despite being spotted together, Valderrama and Kelly have not made any comments about officially being an item.
The source added that although they are not “boyfriend and girlfriend,” Valderrama has begun “ignoring calls from some of his other girls."
Recently the Venezuelan stud opened up to Latino gossip king Perez Hilton about the age difference between him and Lovato (at the time he was 31 and she was 19) and about dabbling in the music business.
“It was a really interesting time for her,” Valderrama tells Hilton. “We were really just best friends. She's amazing, she's a great human being. And I'm so proud of her considering all of the different obstacles and everything she's been through.”
“I mean, she's got a pretty good head,” Valderrama continued. “Like I obviously — like she said, it's going to be a struggle every day. But I was very proud to be there for her when she needed me, and she was there for me a number of times too. And we have a great friendship.”