Culkin was 10 years old when he met Jackson in 1990 and they became friends. He reportedly donated sperm to an unknown surrogate mother who gave birth to Prince Michael II, also known as Blanket, in 2002, reports thesun.co.uk.
"It is well-known Jackson and Macaulay shared a unique bond. Now rumours are spreading like wildfire that Macaulay, who Jackson nicknamed Mack, is actually Blanket's biological dad," said a source.
Jackson and Culkin were close friends for years. The child star frequently visited the singer's Neverland ranch where he raised eyebrows by sleeping in Jackson's bed and took the witness stand to defend him during Jackson's 2005 trial for child molestation.
The moonwalker is said to have idolised Culkin and thought using his sperm to create a child would be the "next best thing" to being his father.
"This isn't just chitter-chatter, even Culkin suspects he's Blanket's father. So many names have been mentioned as prospective dads and this is probably the wackiest yet... But Jackson and Culkin were best friends. He was one of the few people Jackson really trusted and Mack never let him down. Really, Jackson idolised him - that's why he asked Mack to donate sperm," the source said.
"Deep down, I think he always wished Mack was his son. Creating Blanket was the next best thing," the source added.
Friends claim the King of Pop, who died in June, was not the biological father of his other children Prince Michael I, 12, and Paris, 11.