She's also accused in the callous drowning death of her nephew, Gustavo, 7, who had attempted to save his mother's life, authorities said.
"This is a crime that has shocked even the most seasoned police officers because there is evidence it was premeditated," local police chief Leisaloma Carvalho told The Sun.
"The teenage suspect has admitted to killing her sister and her seven-year-old nephew. And told us that she threw Gustavo, who couldn't swim, into the nearby lake, then stoned him until he drowned."
The teen intended to give the baby boy to Catia Rabelo, 35 — whose own 15-year-old son is accused of helping her carry out the sick plot, according to the report.
Ms Rabelo had been faking a pregnancy and needed a child to prove it — so that her gold-prospector beau would marry her, the report states.
Authorities found the newborn alive in the care of Ms Rabelo's teen son.
Relatives reported Fabiana and Gustavo missing after they failed to return home after a night out with the teen suspects October 18.
Fabiana's body was reportedly discovered in a shallow grave on a vacant plot three days later, her face disfigured. An autopsy report released Friday indicates she may have been alive when the teen used a knife to cut the infant from her womb.
Gustavo's body was found floating in a man-made lake nearby.
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Both teens have been charged with double homicide and are being held in a youth custody centre awaiting psychological assessments, according to the report.
The 13-year-old said the grisly crime was an act of vengeance — a claim that authorities are investigating, Mr Carvalho told The Sun.
"The girl made a separate claim that she committed the crimes out of revenge because she was sexually abused by her sister's husband and ill-treated by Fabiana, who didn't believe her stories," the police chief said.
Rabelo went on the run after the incident, but was ultimately busted Wednesday and confessed to inciting the teens to carry out their sick crimes, according to the report.
Meanwhile, the baby, weighing 3.9 pounds, is under observation at Porto Base Old Hospital, where he's understood to be in good health.
Brazil's "womb raider" case comes less than a year after nine-months-pregnant Chicago teen Marlen Ochoa-Lopez was found strangled to death with her unborn child carved out of her body.
Clarisa Figueroa, 46, who met the 19-year-old on Facebook, and her daughter, Desiree Figueroa, 24, were both charged with murder.