"That sh-t's already started," Ballas toldPeople, adding that their professional relationship is anything but romantic.
"She is a sweetheart. We have a lot of fun. We laugh a lot. We're getting along great."
Cavallari -- the former The Hills star who also appeared on Laguna Beach, MTV's The Hills predecessor -- said the rumors didn't come as a surprise to her, especially since both dancers are newly single.
"I kind of expect [the dating rumors], to be honest," the reality TV star added. "But that's what happens when you put two people together."
Ballas was previously dating former American Idol tenth-season finalist Pia Toscano, but the couple mutually decided to split last month after they had a "heart-to-heart talk" about their busy schedules, People reported.
Cavallari had been engaged to NFL quarterback Jake Cutler, but the couple reportedly called off their wedding after Cutler had decided to end their relationship.