The Atlanta-bound flight had left its gate at Midway International Airpor before it turned back to deplane the family.
Filmed by co-passenger Alexis Armstrong, the video shows two flight attendants talking to the toddler's father and another woman after which one of the flight attendants says, "The decision has been made."
Armstrong told WGN that the child was crying before takeoff and didn't want to sit in her seat.
"She was crying, she was nervous," Armstrong said. "The flight attendant had stated that he needed to calm her down or he was going to be escorted off the plane with her."
The father asked the attendant to give him a minute and by the time the plane was taxiing, the child was sitting quietly in her own seat, Armstrong said.
But the plane ultimately turned back around and security personnel escorted the family off, according to Armstrong.
Armstrong added that even though there was nothing legally wrong with what happened, she said the incident didn't need to escalate so far and that parents can't always control scared toddlers.
Southwest Airlines responded to the incident with a statement.
"After departure Wednesday evening, Flight 1683 to Atlanta returned to the gate at Chicago Midway to allow supervisors to board the aircraft," the airline said. "Our initial reports indicate a conversation escalated onboard between the crew and a customer traveling with a small child.
"We always aim for a welcoming and hospitable experience and regret the inconvenience to all involved. The traveling party was booked on the next flight to Atlanta after the original flight continued as planned. We will reach out to the customer to listen to any concerns they have about their experience and look forward to welcoming them onboard again soon."
The father and child have not been identified.