The CHANEL mastermind and the rapper were spotted enjoying a New York business lunch where they planned ideas for a new clothing line.
A source told the New York Post newspaper: ''They were in a deep conversation, then later appeared to be getting devices out to discuss design ideas.''
The 35-year-old rapper made his fashion debut at Paris Fashion Week in October 2011 to widespread criticism from fashion critics.
He tweeted at the time: ''This is my first collection. Please be easy. Please give me a chance to grow. This is not some celebrity sh*t. I don't f**k with celebrities. I f**k with the creatives in this room, the amazing people who spend every day of their life trying to make the world a more beautiful place.''
Kanye's ready-to-wear line - Dw Kanye West - has drawn an A-list following, but he failed to show his latest collection in Paris this autumn.
Creative director Karl has taken Kanye under his wing and the rapper was a guest of honour during Chanel's spring/summer 2013 show.
Karl also photographed the rapper for his touring Little Black Jacket exhibition, which opened in London earlier this October.