Police are hunting for the killer of a three-year-old boy found dead by the side of a Melbourne road just hours after he went missing from a relative's home.

Police said Gurshan Singh's body was found by a council worker in long grass by the side of a road in Oaklands Junction, in Melbourne's north, about 7pm (AEDT) last night.

He was found yesterday afternoon, 30km from where he was last seen at a relative's home in Lalor.

"Clearly, the circumstances are suspicious so we are fearing the worst," Deputy Police Commissioner Ken Jones told reporters last night.

"We are treating it ... as a homicide."

Mr Jones said that while police were investigating a number of areas there were no suspects at this stage.

Gurshan's mother, Hartreet Kaur Channa, told police she thought her son had walked out the David Street house front door while she was showering.

She rang police after he had been missing for 45 minutes, prompting a massive search involving more than 15 police units, the dog squad and air wing.

Mr Jones said the boy's body was found fully clothed in blue jeans and a grey top, but he could not say how he had died.

He acknowledged the death would ignite massive media interest in India following a recent spate of violent acts on Indians in Melbourne.

"I would ask for calm and support from media to allow investigators time and space to conclude a thorough investigation."

- AAP cdh/srp