Sources tell Us Magazine Billy found out about it last week, and immediately filed for divorce on October 27.
The source says Michaels "became close to the entire family" this past February when he and Miley released their duet "Nothing to Lose."
Apparently Tish and Bret began their secret affair not long after. "Billy Ray was completely unaware of what was going on," the source explains.
Michaels’ rep denies the claims, saying "There has never been an affair or a fling. But the source insists, "It was a professional relationship that turned into something more."
Tish was seen at Michaels' Feb. 28 show at the Key Club in L.A., and he had once asked her production company’s help to adapt his book, Roses & Thorns, into a movie.
Star was first to report the allegations. More details to follow…