Monifa, whose name means "I am lucky" in Nigeria, was born three weeks ago after a difficult breach birth.
Unable to stand or feed herself, the piglet-sized hippo had to be nursed round the clock by staff at Taronga Zoo in the Australian city.
Keepers Renae Zammit and Tracy Roberts spent a fortnight sleeping with and hand-feeding Monifa from a teated syringe until she was nursed to full health.
The infant has now moved into her own pen and is ready to follow the footsteps of her father Timmy, the last pygmy hippo born at Taronga Zoo 23 years ago.
Monifa has now doubled in weight and is drinking from a bowl, content to suckle the thumb of her keepers. A delighted Misss Zammit said Monifa was already showing signs of playfulness.
"She's such an inquisitive little thing and loves bath time, she even turns somersaults in the water," she said.
The endangered species, whose natural habitat is the lowland tropical forests of west Africa, grows to about four feet in height - almost half the size of other hippos.
There are believed to be just 3,000 pygmy hippos living in the wild, mostly in Sierra Leone, Liberia, Ivory Coast and Nigeria.
Their numbers have fallen due to the constant threat of poaching, natural predators and war in west African countries.
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