Emergency services were called to a home in Auburn at approximately 2:05pm on Tuesday after reports a child had been hit by a vehicle entering the driveway.
The girl was rushed to Westmead Hospital in a critical condition but later died from her injuries.
A 27-year-old man was taken to Auburn Hospital for mandatory testing, police said. A crime scene has been established and an investigation is underway.
Police confirmed a report will be prepared for the coroner. No further details have been released at this stage.