The hunky pop singer, 22, was reportedly issued the ultimatum after the Charlie's Angels actress, 31, heard her lover had been seen kissing and cuddling a mystery blonde on a boozy night out with fellow stars ENRIQUE IGLESIAS and Val Kilmer in London as he completed his British tour.
Diaz flew over to the English capital last week (ends12DEC03) to join Timberlake as he performed the last of his live shows.
A source tells British newspaper THE DAILY STAR, "Cameron has laid down the law to Justin and told him she won't stand for any more boozy nights with young girls.
"She understands that Justin - as one of the hottest singers in the world - is bound to get a lot of attention from fans and groupies. But she's told him that there is no excuse for these incidents.
"She's a proud woman. He's had his two chances - and it's a case of three strikes and you're out."