A California-wide Amber Alert was issued for 2-year-old Bethanie Carraza, who was found safe inside the suspect's vehicle in Cambria.
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San Jose police officers said 24-year-old Victor Magana stabbed the girl's mother at a residence in the 500 block of South 11th Street in San Jose on Sunday night before the abduction.
Al Ashcroft spotted the suspect's vehicle, a 2007 Hyundai Santa Fe, just minutes after receiving an Amber Alert on his phone.
"Told my wife, 'Get out, I'm going to block this guy in,'" Ashcroft said.
Magana's keys were inside the car, along with his daughter.
A witness said Magana denied being the suspect and said his daughter hadn't eaten in six hours.
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Video shows the suspect hitting the car, trying to break-in.
"He hit the window twice trying to get in, and finally a guy bear hugged him from behind and I took the rock away," Ashcroft said.
Footage showed Magana on the ground as law enforcement arrived to take him into custody.
Ashcroft said the girl was in good spirits.
The mother of the daughter remains in critical condition.