Photographs of the singer with the Newcastle United player have been widely published.
Stephanie Ward, the mother of Simpson's daughter Skye-Lorena, has said she is expecting their second child.
She told The Sun: "I have a baby on the way and a little girl who's one-and-a-half. If he wants to leave that, then that's up to him.
"But I won't be here for him if he comes back. I don't care any more. He's made his bed so he can lie in it."
Speaking to her fans on Twitter, Tulisa said: "I don't want 2 get in2 a public war of words, but what is being written about me 2moro is absolutely not true."
A statement released by her lawyers said: "Tulisa categorically denies any allegation that she entered any relationship with Danny Simpson while he was still in a relationship with Stephanie Ward."
The star, who is currently on screen in The X Factor and rose to fame as part of N-Dubz, was pictured in Newcastle and Manchester with Simpson.
Simpson, 25, was born in Salford and started out at Manchester United before joining Newcastle in 2009 in a loan deal that the club made permanent six months later.