The toddler suffered severe facial injuries when she was attacked by the dog, believed to be an American bulldog, at the house in Cotton Walk, Broadfield, Crawley, West Sussex, on Saturday at lunchtime.
She was rushed by ambulance to the East Surrey Hospital in Redhill, Surrey, where she was pronounced dead.
The girl’s uncle, a 32-year-old man who lives at the property, has been arrested on suspicion of manslaughter and remains in custody while he is questioned by detectives.
Detective Chief Inspector Trevor Bowles, of Sussex Police, said: “Officers have been working through the night to build up a picture of what led to this appalling tragedy.
“Our inquiries are actively continuing and a suspect remains in custody.
“It appears that the little girl was in the kitchen with her grandmother, mother and three-year-old sister when the dog entered the house from the garden.
“What happened next was truly horrific as the dog picked up the child and attacked it in front of her family. Two workmen at a nearby property heard screaming and ran to the house to help. They were able to distract the animal who dropped the baby from its jaws.
“One of them then pulled the child to safety before an ambulance was called.
“The man currently in custody was not in the address at the time of the attack but arrived shortly afterwards and was arrested.
“He also lives at the address and is the owner of the bulldog.”
A Sussex Police spokeswoman said the dog was being “securely held” and would be destroyed.
A postmortem examination is to be carried out later to establish exactly how the girl died, she added.