Matarazzo announced her intention to marry Murphy after five years together in July 2001, but a friend of the couple told Us Weekly that the relationship has soured in recent months.
"They've been on the way to ending things for a while," the insider explained.
The source went on to say: "In the end, they realised they were missing the spark. They had been best friends for so long, it turned out they loved each other, but they were no longer in love."
Matarazzo is apparently coping well with the break-up, with the informant adding: "The relationship made her learn a lot about herself and she is thankful for that."
A representative for Matarazzo has not commented on the split rumour.
Matarazzo is well known for her breakthrough role as Dawn Weiner in Welcome to the Dollhouse, as well as playing Lily Moscovitz in The Princess Diaries.