Police have identified the child as Esther Palmer.
Authorities are trying to determine if street racing is to blame for the crash that was caught on surveillance video.
The crash happened around 7:15 p.m. Monday at 2nd and West York streets.
Police say a 17-year-old was driving a Honda Accord, traveling southbound at a high rate of speed on 2nd Street, when he smashed into a Honda Civic that was traveling westbound on York Street.
Three-year-old Esther was launched from the back of the Civic. The child's 43-year-old mother, who was driving, and her grandmother were also injured.
"We don't know at this time whether she was buckled in properly or not," said Philadelphia Police Capt. Patrick Kelly. "It's going to be part of our investigation."
The child was rushed to St. Christopher's Hospital for Children where she was pronounced dead at 7:51 p.m.
Her loss so big for those that loved her.
"Last night I heard about it. But it never crossed my mind that it would be basically like I call her my princess, my baby," said Gabriela Torres, family friend. "She was just so happy. She was a precious baby. Everyone wanted to be a part of her."
Police want to talk with the driver of a late 1990s black Honda Accord that can be seen in surveillance video, following closely behind the striking vehicle.
In the video, the driver can been seen making a quick right onto York Street, a light pole falls and hits the top of the vehicle, and possibly the windshield.
"Ya'll know you were a part of it so please step up and say something because there's a grieving family," said Torres.
Detectives are also investigating whether the drivers of the two Accords were drag racing.
"Right now that's an ongoing investigation. They are seen traveling down 2nd Street at a high rate of speed," said Kelly. "We do not know for sure they were drag racing at this time."
Though an eye witness says there's no doubt they were racing.
"God know and I know they were racing, sir," said Emilio Flores, witness.
Those we spoke with Tuesday night at a memorial of candles and teddy bears for Esther have a message - think twice now before speeding through city streets.
"This is not a race track. No where in Philly is there a race track for you all to be going buck wild on these streets. Ya'll took the life of a 3-year-old," said Torres.
Esther's mother was treated and released. Her grandmother remains in critical, but stable condition.
The 17-year-old driver was taken to Temple University Hospital where he was treated and released.
Police have interviewed the teen, who has since retained an attorney.
No charges have been filed at this time.