A Met police spokesperson said: "Officers and London Ambulance Service attended and inside the address they found a four-year-old boy suffering knife injuries.
"He was taken to hospital for treatment but despite the best efforts of the emergency services, he subsequently died from his injuries."
Police said the boy’s next of kin have been informed and are being supported by specially-trained officers.
An investigation is under way led by homicide detectives from the Met’s Specialist Crime Command.
A 41-year-old woman, who was known to the boy, was arrested at the scene on suspicion of murder and remains in custody.
Police say they are not looking for anyone else in connection with the incident. Forensics officers are at the scene as detectives make house to house inquiries.
Flowers have been left at the scene. One heartbreaking message read: "Rest in paradise beautiful Kobe."
Forensics officers could be seen searching rooms inside the property throughout Thursday afternoon. Neighbours told of their shock following the incident in "a very quiet street".
A neighbour, 36, said: "I heard screaming when the police went inside."
They said a woman at the scene in her pyjamas and covered in blood was "shivering, shaking".
The neighbour said they “seemed like a loving family” and added that the boy was "a very happy child".
They continued: “We often saw the boy playing on his scooter. He was happy and energetic.
"I think he is in nursery. I don’t think he is in reception yet. He must be a couple of months younger than mine.”
Another neighbour told the Standard he was "heartbroken" about the boy's death and explained he used to "see him everyday".
A resident who lives directly opposite the flat laid flowers at the scene on Thursday alongside a card.
It read: “Precious little one, we are sorry you were not seen. Your life was too short.”
Paul King, 38, who lives near the scene told the Standard there seems to be “an epidemic of violence in the borough”.
The Hackney resident said: “I’ve lived here for five years I have not seen this much (crime).
“Over the past few months there has been an increase in violence and things like this happening. I’m thinking about packing up and going while I still can.”
Detective Chief Superintendent James Conway, who leads policing for Hackney and Tower Hamlets, said: “This is an extremely distressing incident which will understandably cause shock and disbelief amongst the local community and those who attended the scene.
“We are working with our partners, including Hackney Council and the school community, to ensure support is there for people who need it.
“Specialist officers from our homicide team are progressing this investigation and continue to work to establish the circumstances of this young child’s death, and the events that led up to it.
"This incident occurred within the home and, while is no wider public safety risk, additional officers will be present in the area as we recognise the impact this will have on the community.”
Officers are collecting CCTV and doorbell footage from the area.