Forming the centrepiece of the scene, once missing a blackboard temporarily replaced the model stating, "Without him [Jesus] there is no Christmas" and asking people to help locate the figure and "save Cardiff's Christmas".
Staff had said the theft earlier this month was "not really in the Christmas spirit" and without the baby Jesus "there is no Christmas".
Rev Canon Sarah Jones, priest in charge at St John's in Cardiff, said it was handed in to a local church.
The nativity scene was raising money for a local church. Last year more than £2,000 was donated by people having their picture taken with the scene and donating to an honesty box.
The model has been returned to his rightful place at the centre of the nativity scene, despite being a little damaged.
Rev Jones told the BBC she was "delighted".
"The German Christmas market sets out a nativity scene each year which highlights the deep meaning of Christmas.
"We are grateful for the generous donations of visitors to the market and of its staff and we use the money raised to help us to serve the people of Cardiff throughout the year."
Stay up to date with the latest news stories from a Christian perspective. Sign up to our daily newsletter and receive more stories like this straight to your inbox every morning.