The lid was blown after police arrested one Yogita Sathe from her flat here recently.
A police official said they reached Sathe while tracing the whereabouts of a two-and-half-year-old girl who went missing earlier this month from Mankhurd in eastern suburb.
After interrogating Sathe, a police team was dispatched to Goa from where her husband Ganesh and two others were arrested while trying to sell the girl for Rs 2.5 lakh.
Police escaped five children who were kept in their captivity in Goa.
Explaining their modus operandi, the officer said the gang used to kidnap children, aged between 8 and 18, from different parts of Mumbai and sell them in Goa, Gujarat and Kerala.
All the accused were booked under relevant sections of Indian Penal Code, he said, adding further probe is on.