The Hollywood pair was seen strolling together through the streets of the seaside town on June 16 before stopping for afternoon coffee at the Carmel Coffeehouse & Roasting Company.
A witness told People magazine, 'Blake ordered two cappuccinos, one with whipped cream and one without. But when she learned that the whipped cream was homemade, she added it to the second drink.'
'She was very sweet,' the onlooker continued, adding that DiCaprio, 36, waited outside.
The pair is believed to have first hooked up after DiCaprio split from Bar Rafaeli in May although reports surfaced last week that his love of partying had placed a strain on his relationship with Lively.