The 30-year-old royal is said to be in daily contact with his former girlfriend, who recently split from her jeweller boyfriend Charles Goode.
The blonde beauty quietly called time on her relationship with Goode three months ago, but new of the break-up only hit last week.
Now, it's reported that she's reuniting with her former flame, whom she dated for six years, five years ago. While the pair regularly attend the same events having so many friends in common, her newly single status has prompted speculation of a reconciliation.
Their Royal Highnesses Prince William (R) and Prince Harry (C) and guest Chelsy Davy (L) watch the Concert for Diana at Wembley Stadium on July 1, 2007
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"Harry and Chelsy are talking nearly every day," an insider told Grazia. "They have always had amazing chemistry, so it's no wonder they've been drawn back together."
"They have mutual friends so they're always at the same events, but there was something about the meeting before Christmas. Since then, it's been very flirty. Everyone in their circle jokes that Chelsy is Harry's Camilla because, like Camilla for his father, Chelsy is the one woman Harry could never get over."
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Prince Harry and Chelsy Davy laugh as they attend Prince Harry's Pilot Course Graduation at the Army Aviation Centre on May 7, 2010
it's also believed that her friendship with Harry after all these years influenced her split with Goode, whom she dated for a year.
"Harry and Chelsy's closeness definitely had an impact on her split with Charles. They have amazing banter as well as chemistry. They've always got on so well and everybody can see it," the source added.
"There are still the same problems as before, because Chelsy doesn't enjoy life in the spotlight and the duties that come with dating the prince. But her reluctance spurs him on. He loves a challenge and he's always seen her as the one that got away."
Harry split with actress Cressida Bonas last May after two years and since has been linked to German model Anastasia Gusev and socialite Camilla Thurlow.
Chelsy Davy attends the wedding of Melissa Percy and Thomas van Straubenzee at Alnwick Castle