The three-year-old girl died in a Jakarta hospital on 6 July. Officials said an overseas laboratory had confirmed the presence of the virus.
This means the country's human bird flu toll now stands only one behind hardest-hit Vietnam.
Indonesia has been accused of not doing enough to stop the spread of bird flu.
Health Ministry official Nyoman Kandun said the little girl, from Cisauk village near Jakarta, had been in contact with sick chickens belonging to a neighbour.
Samples sent to the Atlanta-based US Centres for Disease Control and Prevention tested positive for the virus, he said.
There was no information on whether any of the toddler's relatives had been infected, another official said.
Indonesian has registered more bird flu deaths this year than any other country. In one case, seven members of the same family died from the virus.
The government has been criticised for not ordering a mass cull of birds in infected areas, but says it does not have enough money to compensate farmers.
On Thursday, a senior official in charge of handling the bird flu outbreak was moved from his post, but an Agriculture Ministry spokesman said his departure was part of a routine rotation of personnel.
Vietnam, where 42 people have died from the virus, has introduced an aggressive culling and vaccination programme. No human victims have been reported in 2006.
Globally, more than 130 people have died of bird flu since late 2003. Most of the deaths have been in East Asia.
The virus has also spread to Europe, Africa and South and Central Asia.
The virus cannot pass easily from one person to another. But experts fear it could mutate and in its new form trigger a flu pandemic, potentially putting millions of human lives at risk.Güncelleme Tarihi: 20 Eylül 2018, 18:16