"We spent eight weeks scouring the forest for them and just couldn't find them," Ms Ashworth said.
The couple owned Loose for six years and the dog was "best friends" with their 4-year-old daughter.
They had adopted Loose from Tokoroa "to rescue her because she was going to be shot otherwise".
With no trace of either dog, Ms Ashworth gave up hope.
"The last thing I expected was a phone call from the council in Tauranga of all places."
Animals services team leader Brent Lincoln said Ms Ashworth was "over the moon to get her dog back".
"They just jumped in the car and came up straight from Wanganui and went back in the same day."
Mr Lincoln said it was obvious someone adopted Loose for awhile but it was rewarding reuniting the dog with her original owners.
"The thing that capped it off was the dog's reaction when she saw this lady," Mr Lincoln said.
"You could tell straightaway the dog knew her. She started pacing and jiggling around all over the place."
Mr Lincoln said the pre-Christmas reunion was an example of the benefits of microchipping pets.
"We had another a week later where the dog had been missing for about a week.
"It had been impounded in Rotorua but it was microchipped. We managed to reunite him with his Tauranga owners."
Microchipping has been compulsory for all newly registered dogs since 2006.