Staff at the funeral parlour discovered the stillborn child in the 33-year-old mother's coffin.
The baby was found next to mum-of-five Nomveliso Nomasonto Mdoyi‚ from Mthayisi village in South Africa, on the eve of her funeral.
Lindokuhle Funeral parlour owner Fundile Makalana told Times Live : "We were so shocked and frightened that we did not even have time to look at the sex of the baby.
"I have been in the business for more than 20 years and I have never heard of a dead woman giving birth."
Both the infant and the mother were buried in one big coffin on Saturday, the paper reported.
The family say the grim discovery was devastating and shocking.
Nomveliso's mum, Mandzala Mdoyi said her daughter died suddenly after having 'breathing problems'.
"I was devastated by the untimely death of my daughter and now I got the shock of my life to learn that she has given birth while she had been dead for 10 days," she said.
Medical experts told local media that it was possible that the foetus was expelled from the mum's body by a build of gases.
The deterioration of muscles after death may also have contributed, a doctor said.