According to Us Weekly, Katy was supposed to fly her entire family to Russell's London home, but instead headed to Hawaii with friends.
"They had a massive fight," the insider dished. "She was like, 'F--k you. I'm going to do my own thing.' Russell replied, 'Fine, f--k you too.'"
According to a second insider, it was more than just a petty argument. "Katy doesn't think Russell respects her parents' Christian beliefs or her friends," they said.
Kate, who grew up in a devout Evangelical household, began singing in church and even recorded a gospel album back in 2001 under the name Katy Hudson.
While the 27-year-old Grammy-nominee spent the Christmas holiday splashing about in an itsy-bitsy bikini just off the coast of Kauai, her British hubby, 36, chatted with mates at a local pub in Coverack, Cornwall.
"They haven't split up just yet, but things are not good," the first source added. "The fighting is getting worse."