It has been speculated the pop princess could be planning a retaliation ever since Taylor released her single Bad Blood and hinted the single was about another female artist who was mean to her - believed to be Katy.
The star is reportedly enlisting the help of Diplo, who famously also had beef with Taylor, to record a song called Crocodile Tears. Ouch.
A source told The Sun: "Katy knew Diplo would be just the man to produce Crocodile Tears for her and has now registered it.
"So far she's been very restrained with what she's said about Taylor in public but is now ready to put her side across via the song - which is all about being fake.
"It isn't yet known whether it would be released as a one-off or as part of Katy's fourth album, but she is keen for fans to hear it."
It would be an interesting collaboration given DJ Diplo previously described his dig at Taylor as one of the biggest mistakes of his career.
The 36-year-old encountered the wrath of the blonde singer's huge fanbase - known as Swifties - in November when he started a not-so-charming campaign to get the Shake It Off singer "a booty".
He later said: "All I know is don't ever get into a feud with Taylor Swift. She has like 50 million people that will die for her.
"It's like an army that's worse than North Korea. You can't step into that arena. That was something I was never prepared for ... one of the biggest mistakes of my career was definitely f***ing with her."
Meanwhile, Katy previously shut down rumours she was planning to take a swipe at Taylor in a track called '1984'.
But Katy did hint we might be hearing her side of the story during an interview with Billboard earlier this year.
The 30-year-old songstress said that she wasn't one to simply take hits.
"If somebody is trying to defame my character," she said in response to the feud, "you're going to hear about it."
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