Red Crescent aid officials said the mother's protective embrace had shielded six-month-old Nassim from falling debris and saved her life.
The rest of her family, which officials said included sisters and brothers, were found dead.
Details of Nassim's recovery are still sketchy.
One Red Crescent Society official said the girl was discovered on Monday a full 72 hours after the quake, but rescue officials and state television later said she had been found after 37 hours.
"She is alive because of her mother's embrace," Hissamuddin Farrokhyar, Red Crescent public relations deputy director in Tehran, told Reuters. "The baby girl is in good condition considering the circumstances."
He said the girl was found in the southern part of Bam. It was not clear how she survived without food or water.
Temperatures at night have been bitterly cold.
Iranian state television also reported Nassim's rescue, a sliver of hope on an otherwise bleak day when the death toll climbed towards 30,000.
"The baby girl was found after 37 hours by rescue teams," state television reported.
"Unfortunately her mother was dead and she is the only one left alive in her whole family in that house."
The world's most lethal quake in at least 10 years laid waste to most of Bam's mud brick buildings in seconds.
Death toll to rise
The discovery of childrens' bodies
among rubble is particularly grim
Officials have warned the toll, which is now officially 25,000, could reach 30,000.
The quake which measured 6.3 on the Richter scale struck before dawn as people slept.
On Saturday night, rescuers found a young boy alive under the rubble, but he suffocated as people rushed forward to dig him free.
"We found a seven-year-old boy alive," said Austrian rescue worker Sabine Seichtinger. "The crowd rushed to the scene. But the boy choked and then died."
The search for children - and the recovery of their broken lifeless bodies - has provoked particular grief in Iran, with the media capturing heart-breaking images such as one of a man carrying the corpses of his two young sons over his shoulders
and burying them together in a small grave.
Earlier on Monday, President Muhammad Khatami and several government ministers flew to the earthquake-stricken town in southeast Iran to inspect damage and rescue work.
His visit followed one earlier in the day by the country's supreme leader Ayat Allah Ali Khamenei who spent three hours in the town.
Khatami, who was wearing a clerical grey tunic, acknowledged on arrival that "the scale of the tragedy is very high".
Khamenei saw the scale of the
destruction for himself
"Whatever we do, it will still be too little," he said. "Hopefully, as time goes by more aid will arrive."
He first flew over the city aboard a M-18 helicopter to get an overview of the damage before touring the town.
Khatami was joined in Bam by some 10 ministers, some of whom had arrived shortly after the quake struck early Friday.
Earlier, Khamenei, accompanied by dozens of bodyguards, also toured the centre of town and its 2,000-year-old citadel which was flattened by the quake.
"We share your pain, we have lost our own children, we are going to try to rebuild Bam, but this time more solidly," Khamenei told survivors.
Looting was reported in town on Sunday, but by Monday large numbers of police and soldiers patrolled the streets and outsiders were prevented from entering Bam without authorisation.