"Reese was the one who had to do it. She just got out of a divorce and was so concerned with her family, she just didn't have the time for him and he really demanded that."

Adds the source: "They're still friends. Things are fine, but it was a clean break â€" [there's] no chance of getting back together."Reps for both actors did not immediately return calls for comment.

Witherspoon, 31, and Ryan Phillippe, 32, who confirmed their split in October after seven years of marriage, have two children: daughter Ava, 7, and son Deacon, 3. The actress started dating Gyllenhaal, 26, her costar in the upcoming CIA thriller Rendition, in the spring.

Although they were careful to avoid the spotlight, they were spotted March 23 dining with two other couples at L.A.'s Il Sole and "being playful," an observer said at the time.

Although the pair didn't have much screen time together while filming Rendition for eight weeks in Morocco, during a reshoot in L.A., "Jake went and reintroduced himself to Reese."

From there, said a friend of Witherspoon's, "Things slowly progressed, but it was never something she thought would happen from the start. She just kind of developed this little crush over time."

People