According to BBC, one-month-old Siwaphiwe Mbambo was found alive and well around midnight on Saturday.
The mother had told police that she was taken during a car-jacking outside a shopping centre in the South African city of Durban on Friday.
However a police official has accused her of making the crime up, after the baby was found with her boyfriend.
The boyfriend and a woman thought to be his other girlfriend, have also been arrested. BBC reports.
"This was a false case and cost us money and resources that could have been deployed in other places‚" said Maj Gen Bala Naidoo‚ KwaZulu-Natal deputy provincial commissioner for the detective service, according to The Herald newspaper.
The abduction sparked a huge media campaign and a search by 100 officers.
The mother had reported that two people stole her car, driving off with the baby.
Both she and her husband made impassioned pleas for their baby to be returned.
Many South Africans were moved by the case, and went on Twitter, using the hashtag #HelpFindDurbanBaby, to urge anyone with information to come forward. BBC reports.
However, further investigation by the police led to the mother's boyfriend.
Baby Siwaphiwe was found in his car, when he was driving with a woman who appeared to be a girlfriend at Mariannhill Toll Plaza.
Local media said the baby had been kept at his house in New Hanover.
A police source told local media that the paternity of the baby is now being investigated.
Police also said the father was no longer speaking to the media.
The baby is currently being looked after by social services.