The source added: "She was screaming at him, telling him he was holding her back and making her hide who she truly is.
"She's told friends and family that she doesn't think their personalities mesh anymore. She's a free spirit and full of energy and she's starting to find Liam a little boring."
There's still hope for the duo though, as this isn't the first time they've hit a rough patch in their relationship. The pair ended their previous engagement in 2013, after having dated for four years when they met on the set of The Last Song.
Meanwhile, the We Can't Stop singer - who identifies as pansexual - recently confessed that her first relationship was with a girl, and claimed she "didn't understand" her sexuality when she was growing up.
She said: "My whole life, I didn't understand my own gender and my own sexuality. I always hated the word 'bisexual', because that's even putting me in a box.
"I don't ever think about someone being a boy or someone being a girl.
"Also, my nipple pasties and s**t never felt sexualised to me.
"My eyes started opening in the fifth or sixth grade. My first relationship in my life was with a chick. I grew up in a very religious Southern family. The universe has always given me the power to know I'll be OK.
"Even at that time, when my parents didn't understand, I just felt that one day they are going to understand."
- Bang! Showbiz