Police say three other children all under the age of 10 years old, were inside the Ann Arbor home when it happened.
Ann Arbor police said at 8:15 a.m. four children ages 4, 7, 8 and 9 were inside the master bedroom of the house on Valencia Circle.
Ann Arbor police say no one has been charged and are continuing to investigate. The 4-year-old boy will remain at the hospital overnight while his three siblings stay with their grandmother.
"My granddaughter was getting ready for school standing outside," said Lisa Edwards, a neighbor. "She (saw) the kids running out screaming."
When a family friend says as they were getting ready for school, the 7-year-old boy spotted the loaded gun on their mother's dresser grabbing it. The gun went off and a bullet grazed the top of the boy's head.
Neighbors on Monday morning awoke to the sound of a gunshot then, children's cries.
"It sounded like a fake gun," neighbor Tara Smith said. "I heard something 'Bap.' And I jumped up and woke my boyfriend up. We ran outside and I heard kids crying, they were standing in the front.
"He had blood coming from his head and I called the ambulance."
Police were out collecting evidence inside the home and from the mother's car. Investigators say when the shooting happened they believe the mother left the children home alone for a short time.
A close family friend says that the child's mother was very distraught Monday, staying with her son at Ann Arbor C.S. Mott Children's Hospital, where he is now stable.
"I was shaking and everything," Smith said. "But glad he's all right."
As police are calling the shooting accidental, they are still interviewing the boy's mother.
Neighbors say they're just glad that little boy survived and no other children were hurt.
"I'm glad he's okay," Smith said. "If you got guns in your house, keep them safe where kids can't see them."