The couple reportedly started off as friends when they met through a mutual friend about six months ago.
"Along the way, it turned into something else," added the source.
Chmerkovskiy, 33, and Upton's romance reportedly took a drastic turn towards serious when they shared a nice dinner in New York for the model's 21st birthday on June 10.
"That's when it really happened," said the source. "It all really started just after her 21st birthday. They just clicked. They have a lot of chemistry together. They get along great. They have a lot of fun together."
People's report is consistent with a previous Us Weekly report which claimed in June the couple had just begun dating and things were "very new."
"He wasn't feeling her anymore," a source told Us at the time.
"[Murgatroyd] didn't want it to end," another source added.
Chmerkovskiy, who starred in the Ukrainian version of The Bachelor in 2011, was also previously engaged to Dancing with the Stars pro Karina Smirnoff but the couple called it quits in September 2009.
Chmerkovskiy leftDancing with the Stars following its fifteenth season, which aired last fall. He competed on thirteen seasons without ever winning a title.
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