Senior inspector of Anti-Human Trafficking cell, Thane crime branch, Ravindra Doundkar told PTI that the woman, identified as Shobha Gaikwad, worked as an 'aaya' (caretaker) at different places and lived in Kalyan's Kolsewadi.
She was on the look out of a customer to sell the child and had also made enquiries at various places in the district.
Acting on a tip off, police laid a trap near a municipal school in Devji Nagar, Bhiwandi on Thursday and sent a decoy to approach the woman, the officer said.
During interrogation, Gaikwad told police that the child was the daughter of her friend and that she took her custody by entering into an agreement on a stamp paper with her parent.
The accused was booked under relevant sections of Juvenile Justice Act with Narpoli police, and was produced before a magistrate court yesterday that remanded her in police custody till July 6.