The remains of the three-year-old girl, found in Ethiopia's Dikika region, is of the same species as the famous hominid fossil skeleton known as "Lucy".
"It represents the earliest and most complete partial skeleton of a child ever found in the history of paeleoanthropology," said Dr Zeresenay Alemseged, of the Max Planck Institute for Evolutionary Anthropology in Leipzig, Germany.
Dating of the sediment in which the bones were found suggests the child lived between 3.31 and 3.35 million years ago. The discovery sheds light on a branch of the human tree known as Australopithecus afarensis.
Lucy, recovered in Ethiopia in 1974, is the most famous A. afarensis fossil. For more than 20 years Lucy was the earliest known member of the hominid family.
Hominids are primates who split from apes between five and seven million years ago. The skull, torso and limbs show both human and ape-like features.
The state of the ancient bones suggest the child was buried in a flood - which may have also caused her death.
"This child will help us understand a lot about the species to which it belongs," said Alemseged, leader of the international team of scientists who reported the findings in the journal Nature.
Researchers led by Alemseged took three years to separate the bones from the rock in which they were embedded. They found the skull, lower jaw, all but two of the teeth, collar bones, vertebrae and knee caps of the long-dead child.
"The... skeleton is a veritable mine of information about a crucial stage in human evolutionary history"
Bernard Wood, anthropologist at George Washington University
"The remarkably complete... skeleton is a veritable mine of information about a crucial stage in human evolutionary history," said Bernard Wood, an anthropologist at George Washington University, Washington.
"The lower part of the body, which includes the foot, the shin bone and the thigh bone clearly shows us that this species was an upright walking creature," Alemseged told Reuters.
But some of the features from the upper part of the body, including the shoulder blade and arms are more ape-like. The fingers are long and curved which suggest she might have been able to swing through trees.
"My opinion is that we cannot exclude that Australopithecus afarensis climbed trees," he said.
Dr Simon Underdown, of Oxford Brookes University in England, described it as a massively exciting discovery.
"The skeleton shows that Australopithecus afarensis clearly walked on two feet but the upper body hints at lots of time spent climbing in trees," he said.
An analysis of the sediment in which the remains were found enabled researchers to build of a picture of the type of environment in which the child lived.
"We can see from the sediment that the region was very much characterised by a mosaic of environment that ranged from forests and woodlands near the rivers, to seasonally flooded grasslands to a flood plain that would have supported more open vegetation," said Dr Jonathan Wynn, of the University of South Florida, who dated the sediments.
The other comparably complete infant hominid skeleton in the fossil record is that of a Neanderthal child who lived less than 100,000 years ago.