Rumours of a reunion have been flying about for months as the couple grew closer during the filming of the sequel, X-Men: Days of Future Past.
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Jennifer, 22, and co-star Nicholas, 23, dated for two years before distance and their successful careers drove them apart in January 2013.
"They started the shoot in April as friends, and then one day they just started kissing," an insider told US Weekly.
"One thing led to another and they hooked up. All her old feelings came rushing back. Now they're fully back on."
The couple have been almost inseparable on the Montreal set of the new X-Men film.
The stars are said to have been visiting each other's trailers and eating lunch together off-set. Nicholas was spotted on a walk around Montreal with Jennifer and her family earlier this month.
Despite trying to keep their relationship quiet in Montreal, both actors have homes in Los Angeles and enjoyed a romantic dinner at The Little Door restaurant in West Hollywood in April.
Jennifer reportedly told fans at a local HMV record store last week that she was ‘in love again’.
In an interview with Elle magazine last December, the Hunger Games actress said, "my boyfriend is honestly my best friend, and hopefully I'm his best friend too."
"He's my favorite person to be around and he makes me laugh harder than anybody," she said.
The Silver linings playbook actress won a Oscar for Best Actress for her role alongside Bradley Cooper in the romantic comedy earlier this year.
Skins star Nicholas has recently starred in the vampire thriller Warm Bodies and took the lead role in Jack the Giant Killer with Ewan McGregor and Stanley Tucci.
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