"Kelly is dead to Giuliana," a source told Us Weekly.
The Giuliana & Bill star is reportedly still heated at Osbourne for turning against her after the controversy in which Rancic made an offensive comment about Zendaya Coleman's dreadlocks at the Oscars -- a comment which Rancic insists was edited out of context on Fashion Police.
Rancic said Coleman's hair must have smelled of "patchouli oil or maybe weed," which prompted Osbourne to tweet "I DO NOT CONDONE RACISM" and then quit Fashion Police shortly afterwards.
Osbourne, 30, "threw [Giuliana] under the bus," according to another source.
Their dynamic appeared to worsen when Rancic reiterated her side of the story on the Today show April 6 by saying it was an editor's mistake and then Osbourne fired off the cryptic tweet, "Liars always get caught."
"The timing of the tweet was no coincidence," an insider told Us. "It was about Giuliana."
Rancic, who apologized to Coleman multiple times, told Extra last week she has a tough time believing Osbourne's message was designed to take a shot at her because she's "telling the truth."
Since Joan Rivers passed away in September of last year, the stars of Fashion Police have clearly struggled with joke delivery. According to a friend of Osbourne's, Rancic "tried too hard to be funny."
Rancic and Osbourne reportedly "didn't see eye to eye" on what was "funny versus offensive."
"This was just such a tough incident -- horrifying -- to have my name in headlines that were insinuating there were racial undertones... It was something I'd never expect in my wildest nightmares to happen to me, and it happened!" Rancic admitted.