The toddler, whose name was not released, was under the care of a neighbor distracted by Sabbath preparations when she stuck her hand in the meat grinder and severed it, ynetnews.com reported.
The girl was flown to the hospital immediately, but doctors said they could not save the girl's hand.
"The hand was injured in the part between the wrist and the elbow, with no possibility for reconstruction," a hospital spokesman said. "She was taken to the operating room where she will be sutured and will later be admitted into the children's hospital ICU."
Police arrested the neighbor, whose name was not released, for negligence after an investigation revealed he buried the severed hand in his yard.