The 20-year-old country singer and the movie star hunk reportedly spent Sunday (24.10.10) holding hands and looking loved-up whilst on a romantic walk around Brooklyn, New York.
An onlooker told Life and Style magazine: "Taylor and Jake were walking around Park Slope holding hands. They looked like a couple!"
This news comes shortly after Taylor - who has dated `Twilight` star Taylor Lautner and was famously dumped by Joe Jonas over the phone - hit the headlines with her new album `Speak Now`, which she claims contains songs aimed at her ex-boyfriends.
She explained: "I will say everything in my music. There`s been extreme joy, extreme pain, extreme curveballs. Sometimes when things impact you so intensely, it takes writing a song to get over them."
One track on her LP, titled `Dear John`, is also heavily rumoured to be aimed at 33-year-old singer John Mayer - who she worked together on a track with last year and was believed to be secretly dating.
The song goes: "Don`t you think I was too young to be messed with? Maybe it`s you and your sick need to give love and take it away."
She denied it was aimed directly at him, but admitted it was a hard song to release for various personal reasons.
Jake, meanwhile, has been largely single since his relationship with actress Reese Witherspoon ended 10 months ago.