The fashion icon is "supportive" of Kaia's happiness, says the insider, but otherwise is trying not to get involved.
Pete has, of course, had a string of high profile romances with famous women in recent years, including pop star Ariana Grande and actress Kate Beckinsale.
A source told Us Weekly: "Cindy's supportive of Kaia and wants her to be happy.
"Right now she's happy with Pete Davidson, so Cindy's trying not to get involved."
Reports first surfaced of a romance between Kaia, 18, and Pete, 26, in October.
The relationship was later confirmed when they were spotted making out beside a pool in Miami, Florida.
(And when we say "making out," we mean the PDA to end them all.)
The insider then added: "Kaia's young, so Cindy's encouraging her to stay focused on her future.
"Kaia trusts her mom completely and looks to her as a role model."
Cindy rose to fame as one of the original supermodels of the '90s, alongside the likes of Naomi Campbell and Linda Evangelista.
Kaia is now following in her mom's famous footsteps, walking the catwalk for the likes of Marc Jacobs, Prada, and Chanel.
Funnyman Pete, meanwhile, rose to fame as a cast member on the iconic late-night variety show, Saturday Night Live.
Perhaps we'll be seeing Kaia hosting an episode in the near future—and maybe Cindy too. How good would that be?
This article originally appeared on Cosmopolitan.com/uk. Minor edits have been made by the Cosmo.ph editors.