A post-mortem is due to take place into her death on Monday afternoon following the tragedy on Gorleston beach in Norfolk on Sunday morning.
Police cordoned off a children's play area on Gorleston beach where people had been basking in the hot weather.
Several ambulance teams were dispatched and the young patient was taken to the James Paget Hospital "in a serious medical condition".
"A police cordon has been put in place at the scene whilst enquiries continue." a statement said.
The family is being supported by specialist officers.
Reports on social media have said a bouncy castle exploded.
A British MP has called for a temporary ban on bouncy castles in public places after a girl was thrown from one and killed by the English seaside on Sunday. "Sadly, despite all the of the efforts and interventions, she was pronounced deceased".More news: History maker Andres Iniesta confirms Spain retirement after Russian Federation defeat
Brandon Lewis, Conservative MP for Great Yarmouth, tweeted: "Absolutely tragic, thoughts are with family & friends, just so sad".
Police and the Health and Safety Executive have confirmed they are leading a joint investigation into the girl's death.
The incident is the latest in which a fun day out with giant inflatables has turned to tragedy.
The girl, believed to be around four years old, was in cardiac arrest when ambulance crews arrived.
Summer Grant, from Norwich, was seriously injured when the inflatable was sent "cartwheeling" 300 yards down a hill in Essex in March 2016.
Biggs said the bouncy castle industry was still trying to recover from the fatal incident in Halfon's constituency in 2016 after a bouncy castle had not been properly secured in high winds.
Married fairground workers William Thurston, 29, and Shelby Thurston, 26, were jailed for three years in June after they were both found guilty of manslaughter by gross negligence and of a health and safety offence.