The 21-month-old, identified as Nicola Tanturli, was last seen in his bedroom on Monday night and was reported missing by his parents the next day.
He is believed to have gone missing after waking up in the middle of the night and leaving the house on his own, possibly while sleepwalking.
A helicopter and about 1000 people – including police, fire and alpine rescuers – had joined the search for the toddler after he was reported missing.
The boy, who is reportedly in good condition, was located about three kilometres from his home in the mountainous Mugello region near the border with Emilia-Romagna.
Giuseppe Di Tommaso, a journalist from state broadcaster RAI, found Nicola after hearing moaning from the bottom of a gorge as he was making his way to the child’s home.
Di Tommaso immediately alerted authorities and it is reported that a police officer descended the 25 metres to bring the child to safety.
Later the reporter said that he stopped at the precise place by chance, getting out of the car after feeling unwell.
It was then that he heard the noises below.
He said the television crew, from La Vita in Diretta, didn’t believe him at first, saying they thought the noise was from a deer.
But Di Tommaso insisted and after shouting “Nicola” down into the escarpment, he heard the boy call for “Mamma”.
“It was an indescribable feeling, a miracle.” Di Tommaso said.
“As soon as he saw us he started to cry.”