The thieves – three men and a woman aged between 19 and 28 – alerted the authorities after breaking into a car in search of valuables and finding the body of a baby inside a rucksack.
"We're assuming it was there for quite awhile," said police spokesman Georg Himbert.
The small red car was parked on some land next to a petrol station in the small town of Merzig, and was apparently up for sale, the Süddeutsche Zeitung reported Monday.
The ownership of the vehicle was tracked down to a 23-year-old woman who reportedly admitted that she was the mother of the dead child.
She is currently being interrogated by police. An autopsy on the baby is also being carried out.
Police are hoping the autopsy will determine whether the baby was still-born or was killed.