The Only Way is Essex star is said to have been on several dates with the rapper in the past few weeks, according to The Sun.
The pair were spotted together at the Funky Buddha club in London on Tuesday, while attending Joey Essex's birthday party.
A source said: "Wretch is a big ladies' man and gets on really well with Lauren. They have a real laugh together and enjoy each other's company.
"It's very early days - they're some way from being an item - but for the time being they are enjoying the flirting."
Their relationship is said to have begun after sending each other messages on Twitter.
Wretch 32 recently spoke to Digital Spy about his collaborations with Cheryl Cole and Leona Lewis.