The two stars were recently seen at Jason Scoppa’s weekly live show at the Sayers Club in Hollywood.
“They’ve been on a few dates together,” a source told E! Online. “They were pretty cozy. Definitely playful and flirty.”
“They were close to each other,” the insider explained. “He had his arm around her waist. They were dancing and also holding hands.”
Derek and Lauren were seen leaving the club through a back door and didn’t stand too close together. A security guard tried to block paparazzi from taking photos.
Lauren Conrad ended a three-year relationship with actor Kyle Howard in June, while Hough was previously linked to Girls Aloud singer Cheryl Cole.