She alarmed police in Ludwigshafen last week, who said they did not believe there had been foul play involved.
The owner of the building had been cleaning the cellar in the town of Freisbach when she made the disturbing discovery, police spokeswoman Simone Eisenbarth told regional daily Die Rheinpfalz.
During their investigation police located the 22-year-old mother, who admitted she hid the baby in the cellar after its birth in the summer of 2008.
“She lived in the house at the time when the baby was born,” Eisenbarth told the paper.
She told police that she did not know she was pregnant before the birth, and that it had not survived.
A police autopsy was unable to determine whether the child was stillborn, but it also showed no signs of violence, the paper said.
The woman told police that she had an emotional connection with the newborn, which is why she hid its body in the cellar, Eisenbarth said.
Police have turned the case over to state prosecutors in Landau, the paper said. If they see no grounds for further investigation the file will be closed.
Gruesome cases of infanticide and child abandonment have haunted Germany in recent years.
The most notorious case involved a woman jailed for 15 years in 2006 for the manslaughter of eight babies. Sabine Hilschenz, a divorced, unemployed and alcoholic dental assistant from a depressed area of eastern Germany, hid the corpses in buckets, flowerpots and an old fish tank at her parents' home.
In October, the remains of four babies were found in a Berlin apartment following the suicide of their alleged mother. Later the same month a man's dog found a dead infant along Munich's Isar River bank.