The 26-year-old singer, who is dating DJ Calvin Harris, 32, was seen rocking a piece of jewelry on her left hand while partying at the music festival in Indio, California.
And on Sunday night she posted a video of herself letting loose in the crowd while cheering on Calvin and Rihanna on stage.
"I'll NEVER forget this moment," she wrote in a message accompanying the Instagram vid, as if to fuel the rumors.
But sources close to the singer told Daily Mail.com on Monday that Taylor is not engaged to Calvin.
So it seems the "engagement" we were all fantasizing about will have to wait for now.
Regardless, it looks like Taylor had an absolute blast at Coachella.
Taylor -- who last month enjoyed a tropical vacation with Calvin -- was initially spotted wearing the suspicious ring on April 16, the day after she arrived to the music festival.
The "Bad Blood" singer was still wearing it on Sunday night while dancing in the crowd as her boyfriend performed "We Found Love" with Rihanna.
In a selfie posted on Karlie's Instagram, Taylor is seen posing for the camera with her left hand (and the ring) clearly in view.
Taylor previously denied reports she was planning to marry Calvin back in September last year with a cheeky tweet.
She wrote, "What the press says I'm doing: Buying a Bev Hills mansion, getting married in an English castle. What I'm doing: Playing a show in St. Louis."
But even though we might not be hearing wedding bells just yet, Taylor -- who has previously dated the likes of Jake Gyllenhaal and Harry Styles -- recently gushed to Vogue about her "magical" relationship with Scottish DJ Calvin, who she has been dating for a year now.
She told the fashion bible, "I'm in a magical relationship right now. And of course I want it to be ours, and low key...This is the one thing that's been mine about my personal life.
"I'm just taking things as they come."