Fire fighters were called to a house fire on Friday where they discovered the bodies of two of the children, aged four and twelve. The ten-year-old was still alive, but died in hospital later.
According to the local Ruhr Nachrichten paper, all three showed signs of having been violently attacked, and a post-mortem showed that the two discovered dead had died of injuries unrelated to the blaze.
Police in Dortmund, North Rhine-Westphalia, arrested the unnamed woman on Friday. A motive is not yet clear.
Their father, a 41-year-old whose wife died in an accident nearly three years before, was not a suspect, the Dortmund state prosecutor said on Saturday. He was seen outside the house being comforted by neighbours.
“When a father loses three children, that's a family tragedy,” a police spokesman said.