A source tells Us Weekly the 41-year-old actress and 35-year-old musician have been "hanging out" over the past few weeks, and the relationship is "very new." Nicole Richie, who is married to Benji's twin brother Joel, is said to have set the couple up.
"Nicole thought they'd click," the person adds.
The pair has been spotted together several times in the last month. A different source tells People magazine the two have "spent a lot of time at Cameron's house."
"Cameron seems very happy with Benji," the person says. "He is the nicest guy and treats her like a lady."
Diaz split from New York Yankees star Alex Rodriguez in September 2011 after a year-long relationship. Madden was once engaged to Australian actress Sophie Monk, and has also been linked to Paris Hilton and Holly Madison.