A security guard made the grisly discovery Thursday when he stopped Tiona Rodriguez, 17, and a friend on suspicion of shoplifting.
Rodriguez may be charged with homicide, the Post said, citing one of its sources.
"She said she had the baby yesterday," the newspaper quoted one investigator as saying. "She said it was not full-term. She said she didn't know what to do with it."
The security guard at the Victoria's Secret in Herald Square in Manhattan reported a strong smell coming from the girl's bag. Police sources told the Post the baby appeared to have been dead for more than a day.
Both teenagers were charged with shoplifting. Rodriguez was reported to be in Bellevue Hospital.