Police were contacted by a woman from Leicestershire on Thursday evening when her young son failed to return home after spending the previous night at his grandmother's house.
The boy and his grandmother were found at a pond in Holywell village (PA)Officers from Lincolnshire Police attended the elderly woman's home in Castle Bytham, but there was no sign of either the owner or the little boy.
A search, which involved an RAF helicopter, was launched and the missing woman's car was found close to the pond in Holywell village at around 10:45pm.
The grandmother's body was recovered from the water soon afterwards and despite efforts to resuscitate her, she was declared dead at the scene.
Divers from Lincolnshire Police Underwater Search Unit found the little boy's body at around 4am this morning.
Detective Chief Inspector Dave Wood told the BBC: 'We don't believe this is suspicious. We believe this is a tragic accident.
'As you can imagine, the family are extremely upset at the loss of a mother and a son. The people of the area are also shocked by this tragic accident.
'Officers are with the family providing them with support and we are working with the coroner to establish why this tragic accident happened.'
The formal identification of the bodies will not take place until Monday and police will not release the names of the deceased before then.