The Oscar winner, 33, shared dinner for two at Santa Monica's cozy Italian eatery Locanda Portofino last Thursday with Jim Toth, an agent at Hollywood's powerful Creative Artists Agency.
After greeting each other with a hug and settling into a corner table, the pair "were very flirtatious throughout dinner," says a fellow diner. "They were having a lot of fun, totally getting along and laughing and talking the whole dinner. Reese seemed very happy. She was smiling all dinner. The mood was upbeat and really good."
Mom to Ava, 10, and Deacon, 6, Witherspoon quietly split from actor Jake Gyllenhaal, 29, last December.
After the nearly two-hour meal – for which Toth picked up the tab – the couple walked outside and parted ways around 11 p.m. "Reese reached around his neck and pulled him close for a hug," says the onlooker. "They kissed bye on the cheek – but it was a very friendly goodbye."
Witherspoon is a CAA client, and a source close to the actress maintains the night out was just business. But a friend of Toth's says the evening was "a date," though "nothing serious." The handsome agent is known as a ladies' man: "He's enjoying the single life," says his pal.
Which likely suits Witherspoon just fine. "Reese is in a good place," a friend told PEOPLE at the time of her split. "She's doing things for her these days. She's married to her kids right now, and they're honestly her first love."