The pair are said to have started flirting via text after meeting on Graham Norton's chat show in December.
And People reported that the rumoured couple were spotted enjoying a cosy meal at Los Angeles restaurant Giorgio Baldi yesterday evening.
But an insider insisted that they were not there together.
'They are not dating. It was absolute coincidence they were at Giorgio Baldi at the same time,' said the source. 'Colin was there at a business dinner and Rihanna was across the room.
'There's no truth whatsoever to the reports and rumours that they're dating.'
Farrell's rep has made no comment.