According to a report on People.com, the pair was spotted on a cosy night out at New York's PH-D Rooftop Lounge atop the Dream Downtown Hotel.
The actress started her night at Marble Lane Restaurant with a large group of friends before heading up to the roof after midnight.
Rap mogul Diddy joined their table around 1.15am and ordered bottles of booze for the table, where Diaz was dancing with her friends and drinking, too. According to a source, 'The table was packed and Cameron and Diddy were very affectionate.'
Still, a rep says the two, who left the club with their friends around 3.15am, are not an item. The actress's rep told People.com, 'They are friends and are not dating.'