Australian singer Minogue belted out the Carly Simon hit as Cowell celebrated with showbiz pals in London on Saturday night.
According to The Sun, US star Carly later spoke to the music mogul and his guests via speakerphone after her friend Piers Morgan extended the joke by contacting her.
She is said to have commented: "I was re-recording the song in the studio the other week and I was at the piano. I just thought: 'Of course, this song is all about Simon Cowell'."
Speaking to reporters later, Cowell revealed: "It was supposed to be a quiet affair, so it was all a big surprise. Carly Simon did say she that she wrote 'You're So Vain' about me, which was highly amusing. It was a great night."
Meanwhile, the star's spokesman Max Clifford told the Daily Mail: "There were several people who wanted to perform the song, but Dannii got to do it. Simon was laughing all the way through. He found it really funny."
Cowell does not turn 50 until October, but had told friends that he will be too busy to celebrate then due to his X Factor and American Idol commitments.