Kevin Costner Insists He's Not Dating Jewel, Flirty Pic Tells Different Story

Kevin Costner says he's not dating Jewel -- even though we have photos and sources telling us otherwise.

The actor went on 'Howard Stern' this week, and addressed rumors that he was with Jewel -- something we were told was the case dating back to December ... when they spent quality time together on Richard Branson's Necker Island.

According to him ... they aren't an item and are just friends -- although he does call her beautiful and a helluva catch.

Kevin goes on to explain that their time together down in the British Virgin Islands was warped into something it wasn't -- namely, he's saying there's nothing romantic here. He also laments the fact that the rumor mill got kicked into high gear, noting he didn't want their friendship ruined.

While he might be saying this now ... we were told at the time by sources with direct knowledge that he and Jewel looked awfully cozy while they were hanging out together ... this on the heels of his nasty split with Christine Baumgartner.

Kevin looked smitten in the pic we obtained, holding Jewel from behind ... and her sitting on his lap. One source told us there was definitely something going on between them -- while another said they were trying to be discreet, even though everyone could see what was up.

Now, Kevin's downplaying it all ... saying Jewel was just someone he had great conversations with that evening. He mentioned others were also on the trip, including Emma Watson.

As for Jewel, she gushed about Kevin in April -- and didn't deny or confirm the romance.

Again ... Kev's saying it's all much ado about nothing -- but we were told a different story. They might not be dating, but people around them sure thought they were six months ago.

We covered it all on the latest episode of The TMZ Podcast, available on all podcast platforms.