Model-turned-actress Megan Fox has sparked rumours that she is dating her Transformers co-star Shia LaBeouf.

The 23-year-old actress, who called it splits with beau Brian Austen Green recently, has moved on and was spotted having dinner with 23-year-old LaBeouf in New York, reports the New York Daily News.

The pair turned heads as they sat side by side during a dinner with 10 friends on Thursday after attending a West Hollywood party together.

"They definitely seemed into each other... Shia couldn't keep his eyes off of Megan. He literally watched her like a hawk all night," said a source.

The report follows LaBeouf's own confession made last week that he feels a real chemistry with Fox.

"I'm a 23-year-old red-blooded male, so sure there's a lot of real there. She's a beautiful woman," he had said.