The two were caught at the Renaissance Pleasure Faire in Los Angeles earlier this week.
He and the mystery blonde kissed and held hands the entire day.
Michael, who shares twin daughter with Lisa Marie, partook in some palm reading.
The ex-couple are still locked in a bitter custody battle over their kids while Lisa Marie accused him of having inappropriate pictures and video of kids on his computer.
Child Protective Services intervened and removed the twins from the family home and granted temporary physical custody to their grandmother, Priscilla Presley.