Shayla Phillips was located about a kilometre from where she was last seen on the Tasman Peninsula, on Friday afternoon.
As rescue crews feared she would have to spend another night in the open, the pre-schooler was found just after 4pm.
State Emergency Service crews spotted her on a steep slope in dense bushland near Halls Rd in Stormlea.
SES volunteer Ben Arthur was on the line of searchers moving through the dense bush regularly calling out to the little girl, and on Saturday described the moment they heard her voice.
"And much to everyone's surprise, after calling out her name for the 100th time, we finally got a response from her."
"Her response was 'Mummy', so I've never been so happy to be confused with someone's mummy before."
He said when she then emerged and approached them, the four year old was grubby and bit confused but quite chatty.
"One of her first questions was about the welfare of her dogs that had been with her which was pretty sweet".
Acting SES Regional Manager for the Southern Region, Mark Dance, said preparations had been underway to step up the search the next day.
Bushwalker groups, aircraft, horses and motorbikes were being called on and there would have been more than 100 people on the ground.
He said the positive result was a great booster for all of Tasmania's emergency services.
"I'm still on duty so I couldn't celebrate but I did have my first good night's sleep in three days so that was pretty good," he said.
Shayla's mother Bianca Page, posted her appreciation on Facebook.
"I just want to thank everyone from the bottom of my heart with everything I have that I am currently sitting here with my precious baby girl with a few bruises scratches bites and a urine infection after spending over 48 hours alone in the Bush," she said.
"A huge big thankyou to the SES Tasmania, Police Victorian officers, ambulance and all the locals of the peninsula, my friends and family and ... the whole of Tasmania."
Late on Friday, Tasmanian Premier Peter Gutwein said the news was heartwarming and thanked everyone who helped.