The youngster was mauled at a house in a suburban street in Halstead, Essex, at 5.40pm on Thursday.
He was airlifted to Addenbrooke’s Hospital in Cambridge but later died.
A 29-year-old woman has been arrested for allowing a dog to be dangerously out of control and injuring a person, Essex Police said.
The dog has been seized by officers and placed in kennels.
The child was attacked at an address in Parker Way in the town, and a police cordon has been placed around the semi-detached property.
Phyllis Younger, who has lived in Parker Way for 58 years, said she heard screaming at around 5.45pm, with emergency services arriving shortly afterwards.
The 82-year-old said the screaming “did not go on for long” and she was sure they were from a child.
“Now I know what the scream was, it is absolutely awful,” she said, adding: “It was like someone was in pain, definitely — agonising screams. It is terrible.”
She said she thinks the screams came from outside, adding: “I don’t think I would have heard it as clearly if it had been in the house.”
Shirley Diver, the mayor of Halstead Town Council, said of the little boy’s death: “It is an absolute tragedy, the whole town will be completely shocked and devastated by this. It is such a terrible thing to happen anywhere, you just don’t expect it to happen in your town. We are a close-knit community, everybody knows everybody.”
Mother-of-five Lisa Smith, 43, who lives in Parker Way, said the family who lived at the address behind the police cordon "kept themselves to themselves” and had not been in the street as long as her other neighbours."
The breed of the dog has yet to be established.