The accident occurred as the girl's family waited to board the ferry in Culebra to return to the main island of Puerto Rico on Thursday, police officer Mario Alvarez told The Associated Press.
"She was carrying it in her hand," he said. "It dropped on the floor and activated itself."
The girl was burned, although the extent of her injury was unclear, Alvarez said. Authorities said they believe the girl was 7 years old, but her name and exact age were unknown because her family initially refused medical treatment for her in Culebra.
She was later taken to a hospital after arriving at the northeast coastal town of Fajardo in Puerto Rico, Alvarez said.
The shell was found on the hugely popular beach of Flamenco, which attracts thousands of tourists every year. Alvarez said the girl picked up the shell near a rusty military tank that sits along the beach's western point and has long served as a backdrop for photographs.
He said FBI agents and police arrived in Culebra Friday to detonate the shell, as well as six other live bombs found near where the girl picked up the shell.
The accident and discovery of additional bombs came as thousands of Puerto Ricans and tourists headed to Culebra for Easter week vacations.
Government officials had not issued any statements as of late Friday afternoon.
An official who requested anonymity because he was not authorized to talk about the case said he saw the incendiary munition after people at the scene called him for help on Thursday. He said he ordered them to drop the artifact into water so it would stop burning and blowing smoke.
White phosphorus is an incendiary agent commonly used in war to create smoke screens. It can also cause severe burns.
The latest discovery of live munitions have outraged environmental activists and Puerto Ricans who have long demanded a thorough clean-up by the Navy. The Navy used the island for military activity from 1939-1975, later moving operations to the nearby island of Vieques.