Lakewood Police say officers responded to the 1600 block of Iris Street just before 10 a.m. after they got a call that a child had a gunshot wound to the chest.
The boy was taken to the hospital where he later died. His name was not released.
Police arrested 23-year-old Adam Laham on charges of child abuse resulting in death and criminal negligence. It's believed he was a family friend from Kansas who was watching the children.
Police are still investigating the incident and would not give details about how Laham is involved.
The people living in the apartments next door say they were shocked when they heard the shot.
"I just heard this big boom and I wasn't really sure what it was. And I just heard one of the parents go, 'Oh my God,' and I heard the kids screaming," Jill Johnston, a neighbor, said.
Neighbors say the police and paramedics came quickly to try and save the boy.
"He was kind of just bloody from head to toe. They just took him out on a stretcher and that was it," Rachel Mendez, another neighbor, said.
Police believe the 3-year-old did not intend to pull the trigger. It is unclear who the gun belonged to.
Neighbors say they are still in shock.
"They're just the nicest family. You never hear any noise from them and the kids are always happy out here playing," Johnston said.
Mendez remembers seeing the boy playing with her own child in this neighborhood playground. She could still see the family's Christmas tree lit up in the apartment window on Friday night.
"He can't unwrap the presents under his tree. It just breaks your heart," Mendez said.
Police say this incident serves as a warning to other families.
"At any time of the year, we need to keep guns out of the hands of children," Lakewood Police spokesperson Bonnie Martin said.
(KUSA-TV © 2011 Multimedia Holdings Corporation)