Their mother was away on holiday with friends and was believed to have left the youth in sole charge of the little girl.
The children were placed in the care of social services after the boy's arrest, which came about when a neighbour spotted the mother's car being driven from the family home at 1am on Tuesday.
The Police have arranged for the mother, who is said to be in her 30s, to fly home.
A source told the Mirror: 'The boy told officers that they could not take him to a police station because he was supposed to be looking after his sister while his mum was on holiday.
'Police visited his home in the Maidenbower district of Crawley, West Sussex, and found the girl on her own.'
The boy was arrested on suspicion of being carried in a stolen vehicle and of child neglect, while another 16-year-old boy was arrested on suspicion of taking a car without the owner's consent.
They were both released on bail until September 27.