The child was struck by a piece of ice falling from a sculpture at the Place Guillaume II market at around 8pm local time yesterday evening.
Eyewitnesses have claimed that the statue, which was near an ice rink, collapsed and shattered into pieces, one of which fatally crushed the girl.
Despite the best efforts of emergency services, the toddler died in an ambulance on the way to the hospital. Police confirmed the death this morning.
A statement released by the police read: “According to initial evidence, an ice sculpture collapsed and a block of ice unfortunately hit a young child.
“The child was severely injured and died in the ambulance.”
The witnesses also said that the girl’s family were distraught and ‘left in tears’. They are now receiving care from a local psychological support group.
RTL reported that the markets were immediately evacuated after the tragic incident as the scene was under forensic investigation.
Local police detectives have launched a full investigation into the cause of the incident are have appeal for eyewitnesses to come forward if they have any information at all.
So far, the cause for the ice sculpture collapsing is not known.
However, this morning the Luxembourg public prosecutors office confirmed that they are conducting the investigation as one into involuntary manslaughter.
All further Christmas events in the city are to be cancelled as a show of respect and solemnity to the victim and the grieving family.
The President of the small European country, Xavier Bettel, tweeted his shock after the tragedy. He said ‘words cannot describe how tragic the incident was’.
He also tweeted: “I am shocked and distressed after the deadly incident yesterday at the Christmas Market where a small child lost her life.
“It is not a matter of regret how sad this makes us. My deepest compassion and compassion for the family. XB.”
One person who was present at the time of the incident, Carlos Veneno, told L’Essential: “A child fell and I heard screams.
“The victim was on the ground about one or two meters from the rink.”
He went on to say that the police responded ‘within five minutes’, adding: “It was very fast, relief also arrived and gave first aid to the child.”
The Christmas fair in the Luxembourgian capital city opened on Thursday evening.