Kayrim Muhammad had been on a field trip with 12 other children to Malcolm X Park with a private camp run by his grandmother.
His grandmother says he was last seen around 5:30 p.m. Monday and by 6:10 she realized he was gone.
A witness claimed to have seen Kayrim being dragged away by a man, leading police to believe the child had been abducted. They even issued an Amber Alert.
At this point, police believe that Kayrim simply wandered onto the school bus from the playground when no one was looking.
Police say they were under the impression Kayrim was driven in his grandmother's van and weren't told there was a school bus involved until they interviewed the grandmother again around 3:00 a.m. Tuesday.
That information led police to a school bus yard in the 4300 block of Rising Sun Avenue at 3:30 a.m. Officers then found Kayrim sleeping inside a bus there. He was unharmed, police say, just a little "dazed and confused."
Kayrim was reunited with his parents at Southwest Detectives early Tuesday morning.
"So happy, so relieved. Thank you, thank the detectives, thank everybody for helping me today. Thank you very much," Kayrim's mother said.
There is no word yet on if any charges will be filed. Police say they will talk to the grandmother and the bus driver in the coming days to see exactly where the protocol broke down.
"Fortunately it came to this good conclusion and, obviously, some things we need to talk about with the bus operators and the owner of this company who runs this daycare," said Lt. John Walker of the Philadelphia Police. "She's trying to do a good thing but, unfortunately, there are some systems that broke down here."