A total of six people were rushed to two hospital – Altnagelvin and Letterkenny General – following the smash on the Carndonagh to Ballyliffin Road at around 6.40pm.
The toddler is believed to be a little girl aged between 2 and 3 years.
The HSE refused to release any details on the individual status of any of the victims of the crash following new protocols introduced by the organisation.
The injuries of the other four people in the crash are not believed to be life-threatening.
Garda forensics officers spent most of yesterday at the scene of the crash at Rasheney.
They are trying to establish the cause of the crash which happened between a jeep and a Volkswagen Passat.
The location is less than four miles from last year’s horrific road crash which killed eight people on the Clonmany to Buncrana Road on July 12th.