Both Arquette and McLarty have not confirmed the baby news but according to reports, the actor has been boasting about being a daddy again to the crew of the movie he's shooting in Vancouver, reported TMZ Online.
"It came as a surprise. They are excited and happy even though this was unexpected," a source said.
This would be McLarty's first child and Arquette's second. He has a 9-year-old daughter with actress Courteney Cox whom he divorced in May this year.
Arquette and McLarty briefly split in mid 2012 due to long distance. Before the separation, Arquette said that he was "serious" with McLarty.
Meanwhile, Cox has also moved on from her broken marriage. She reportedly dated "Cougar Town" co-star, Brian Van Holt, over a year ago but has split from him.
Arquette divulged that she is now dating someone new whose identity has been kept a secret.
"She's with someone who loves and cares for her. That's all I care about," Arquette said.
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