The body of Royalty Floyd, who was 20 months old, was discovered by a family member in the warm cooker on Monday at around 7pm.
Police arrested her grandmother, Carolyn Jones, at the scene. The 48-year-old has been charged with first-degree murder and is in custody.
The horrific death happened in Bolivar County, Mississippi.
Police say it not clear whether the toddler was already dead before she was placed in the oven.
Local Sheriff Kevin Williams told US news site WREG: “While the official cause of death is still under investigation, authorities have reason to believe the child was stabbed and burnt.
“Dark days such as these can only be brightened when justice has been served."
He added: “I’ve been in law enforcement a long time, 26 years almost.
“This is one of the most horrible things I’ve ever seen.”
Royalty’s mother, Veronica Jones, has started a GoFundMe page asking for help with funeral and burial experiences for her little girl.
She wrote: "My daughter would have been 21 months old on October 17, 2018.
"Royalty was so beautiful & I loved her more than anything in the world. I'm starting this gofundme to take care of the funeral arrangements of Royalty Marie Floyd. Anything that is giving will deeply appreciated."
Neighbours have also expressed their disbelief at the horrific news.
“It just shocked everybody,“ said neighbour Earlean Carter.
“I thought the house was empty. I didn’t know no one lived there.”