The witness claims she was suspicious when she saw a woman hand "a baby in a blanket" to a man days after the girl's disappearance, The Daily Mail reported Sunday.
The exchange allegedly occurred 100 miles from the resort town of Praia da Luz where the McCann family was vacationing.
The two involved in the swap were later seen leaving the scene in separate vehicles. Neither was Portuguese, the witness said.
Investigators claim they know the identity of the couple involved in the sighting and notified Portuguese detectives.
Officials believe the incident is linked to earlier witness testimony in which Jane Tanner claimed to see a man carrying a child she later believed to be Madeleine McCann.
Madeleine McCann vanished from a vacation apartment May 3 in Praia da Luz, Portugal.