The incident occurred on Wednesday afternoon while the boy was playing with a six-year-old boy in his parents^apartment in Nuehausen am Rheinfall, Schaffhausen cantonal police said.
While the unsupervised children were playing, the teddy fell out of one of the open windows.
The four-year-old plunged out the window in a bid to retrieve the stuffed toy, police said.
He fell nine metres onto a canopy at the entrance to the apartment, police said, which likely prevented the accident from being fatal.
Neuhausen fire fighters rescued the boy, who broke a leg and suffered bruises but otherwise was miraculously none the worse for wear.
Police said an investigation has begun into the exact circumstances of the incident.