Officers are questioning two boys, aged ten and 11, who were arrested on allotments close to an abandoned clay quarry in Doncaster, shortly afterwards.
The victim was found during a frantic search in the Brick Ponds area of Edlington, Doncaster, South Yorkshire on Saturday.
People living nearby described how another boy, aged nine, was seen wandering along the street "dazed" and covered in blood.
Jean Wright, 68, said: "My husband saw him walking past the outside of our house and he was covered in what my husband thought was red paint. When he went out he saw it was blood.
"We brought him in and my husband calmed him down. He had a big gash on his arm and he was covered in blood on his head. He was shaking very badly and going into shock. We managed to get his name out of him and call an ambulance."
The youngster told them that he and the other boy had been riding bikes and were beaten up.
Alarmingly, he said the older boy could not see, and Mrs Wright and her husband Derek, 70, immediately alerted police.
Mr Wright described how his son Ian found the 11-year-old on the edge of a stream, lying face down with his arms outstretched covered in dried mud and blood.
He waited with him until the police arrived as the youngster drifted in and out of consciousness.
The 11-year-old was critically injured and was airlifted to Sheffield Children's Hospital and put in intensive care.