Liam Evans was found near his grandfather Gwilym Evans's car, which had plunged 150 yards down a steep slope at a remote spot in north-west Wales, about 50 miles from Mr Evans's home in Colwyn Bay.
Liam was discovered sitting crying in thick ferns near the wrecked Vauxhall Vectra. He had survived the crash with only cuts and scratches and was flown to Glan Clywd Hospital, near Abergele, by police helicopter.
The body of 61-year-old Mr Evans, a retired police inspector, was found 20 yards further up the slope at the Horseshoe Pass, near Llangollen. Police say that it is not yet known how he died.
Detective Superintendent Eric Jones of North Wales Police said it was possible that the car could have been hidden on the mountainside for two or three days. It was eventually found by a young boy from the Wirral who was on a day out in the area - a panoramic beauty spot that attracts hundreds of visitors a day during the summer.
As forensic scientists began to try to piece together a picture of what might have happened, Det Supt Jones said it was possible that Mr Evans had managed to get Liam out of the car before losing consciousness.
"It would appear at this early stage of the investigation that it is nothing more than a tragic accident," he said.
"Liam has nothing more than a few scratches. It is remarkable how he survived."
He said that there were signs that the car had rolled over. The straps on the car's child seat and the driver's seat belt were found unsecured and the driver's airbag had inflated. The spot where the car came to rest was hidden from the road, although police said the point where it left the carriageway could be seen.
Liam was found only hours after his parents pleaded for his grandfather to contact them and said his disappearance was totally out of character.
Ruth and Gary Evans said Mr Evans was devoted to the little boy and his three-year-old sister Sophia. They were at their son's bedside last night.
Det Supt Jones said the discovery of their son had been one of both "happiness and sadness".
"When I broke the news to both parents I think they were torn between elation and sadness," he said. "You can imagine the pressure the family have been under during the last four days."
Liam and his grandfather vanished on Thursday afternoon. Mr Evans and his wife, Barbara, were looking after him while his parents took Sophia to Liverpool's Alder Hey hospital, where she is being treated for coeliac disease, which means she has to follow a gluten-free diet.
During the afternoon, Liam became boisterous and Mr Evans told his wife he would take him out for a while so that she could prepare his food. Minutes later, Mrs Evans discovered they had gone out in the car.
When they had still failed to return three hours later she reported them missing.
A massive hunt was organised and more than 100 sightings were reported to police, who said they were baffled by Mr Evan's disappearance.
He had severe arthritis which made it impossible for him to walk long distances without suffering extreme pain.
The only positive sighting was later the same day at a garage in Colwyn Bay, where Mr Evans filled the tank of his car with petrol.
A sighting of a man and a boy answering the name Liam was made later the same day in Criccieth, more than 50 miles south of Colwyn Bay, but it was not confirmed.
Det Supt Jones, who worked with Mr Evans before he retired in 1986, said he was a placid and quiet man.
He was also said to be very friendly and sincere and in all his time as an officer, had reacted well under pressure.
During his career Mr Evans earned 10 commendations and was a member of Special Branch for a time.