The child was "wading just in the water along the lake's edge at the time that the alligator attacked," Orange County Sheriff Jerry Demings said.
"The father actually went into the water to wrestle his son from the grips of the alligator," he said. The father suffered minor scratches on his hand, but was unsuccessful in getting his son back.
The mother also went into the water, but did not wrestle the gator — she was trying to find her child, he said.
"The sad reality of it is it's been several hours and we're not likely going to recover a live body," he said.
Demings said there is no record of similar incidents in this particular area.
The family of four — parents, the boy and his 4-year-old sister — is on vacation from Nebraska, Demings said. They arrived Sunday.
"Everyone here at the Walt Disney Resort is devastated by this tragic accident," Jacquee Wahler, the Vice President of the Walt Disney World Resort said. "Our thoughts are with the family. We are helping the family and doing everything we can to assist law enforcement."
Demings said no reports of nuisance alligators have come in the region recently. The alligator is between 4 and 7 feet long, Demings said, adding he's unsure of its exact size.
Baby pen was near water
The Reedy Creek Emergency Services call center first received a report about the attack at 9:16 p.m. ET.
The incident occurred on a sandy waterfront area outside the hotel near the Seven Seas Lagoon on the property.
Witnesses said the family was on the beach and the 4-year-old was in a play pen about 20 to 30 yards from the water on the sand, according to Demings.
He said there are "No Swimming" signs at the lagoon and no one else was in the water at the time of the attack besides the child.
This body of water is not for recreational swimming "likely for that very reason," the reason being alligators.
"This is Florida and it's not uncommon for alligators to be in bodies of water," he said.
Declan Salcido, who's on vacation with relatives from San Jose, California, was coming back from the animal kingdom when the first ambulance arrived just after 9:15 p.m. ET.
He said there are many "No Swimming" signs near the lagoon visible "from any vantage point."
Authorities have searched for the child for hours and do not plan to stop until he is found or recovered.
Helicopters, sonar, marine units and an alligator trapper are being used in the rescue effort. Divers are on standby.
"We're not leaving until we recover the child," Demings said.
A handful of people witnessed the incident and supplied police with information. CNN staff on the scene saw at least 10 emergency vehicles, and the beach has been cordoned off.
Salcido said he saw seven or eight boats searching the waters, including two Disney security boats and pontoons owned by the company to take guests out on the water for fireworks.
When he first arrived, there was only one boat searching near the shore. But more boats rapidly came to assist and have now moved much further away, searching a "wider pattern."
The Florida Department of Fish and Wildlife is conducting a parallel investigation and is participating in the search. It has deployed an alligator trapper, officer Chad Weber said.
"We're putting every effort into locating the child and trapping this alligator," he said. "We'll be here with them until there's a resolution."
A witness told CNN a movie was being screened on the beach that evening.
However, Salcido said that the movie started earlier in the evening and would have been finished by the time the incident occurred.
A helicopter with a search light scoured the lagoon as a handful of Disney employees ushered people away from the sidewalks overlooking the beach.