Kiara Moore was just a week away from her third birthday when she was found in the silver Mini after police discovered it in the River Teifi in Cardigan, West Wales.
Officers had received a call about the missing Mini at 3.30pm on Monday and it was found just after 5pm.
On Facebook, it was claimed that the car had been stolen from the town with little Kiara inside.
Initially Dyfed-Powys Police said: “A child has been removed from the vehicle and is receiving medical attention.”
But in the early hours of Tuesday, they confirmed that Kiara had died at University Hospital of Wales in Cardiff.
Kiara’s father Jet Moore wrote on Facebook: “A mega thank you the officers who jumped in the river and the rest of the emergency services for all they did.
“Unfortunately Kiara had an amazing but short life.”
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Police added: “We’re investigating the circumstances surrounding this tragic incident.”
They appealed for witnesses who may have seen the silver Mini enter the river between 3:30pm and 4:50pm on the afternoon of Monday 19 March to call 101 quoting message 216 of 19/03/2018.