Two nurses and a doctor at a Cairo hospital are among five people arrested and police say they are still searching for the hospital manager.
The babies were reportedly sold to childless couples after Caesarean sections were performed on women carrying unwanted children.
Babies were said to have been sold for up to 3,500 Egyptian pounds ($570).
According to Egyptian media reports, women who had come forward too late for an abortion were offered a Caesarean section and their babies were then sold on, apparently at a profit.
Abortions are lawful in Egypt if the mother’s health is at risk.
Only a limited form of adoption is allowed, to the extent that children cannot take the name of their adoptive families.
Trade in such a black market in babies would have enabled couples to avoid Egypt’s legal restrictions.
Although the details of the case provided by police are sketchy, it appears they have disrupted an extensive child-trafficking ring.
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