The court was told how he had a large amount of pornography on his cellphone and repeatedly raped her while they played hide-and-seek.
The girl, now five, told her mother of her ordeal.
The boy, who is now 13, admitted to raping and sexually touching his sister. He was found guilty of a second count of rape after a trial at Brighton Youth Court.
The court was told that the boy, who cannot be named for legal reasons, had a cellphone and investigators had found a significant amount of pornography on it.
Youth offending experts will now carry out assessments to decide whether he poses a risk to the public and whether he should face jail.
At an earlier hearing, the mother of the girl, who is half-sister to the boy, wiped away tears as she described how her daughter had told her what had happened to her.
"She said to me, 'Mummy I want to tell you something'. She didn’t normally say things with such an introductory manner," the girl’s mother said.
"She wanted to tell me. It was something important to her. She said it happened while they were playing hide-and-seek."
The mother said her daughter divulged more about a week later, giving details of at least two occasions when she was raped and another time she was sexually assaulted.
“She said he offered her sweeties to do this. She said she didn’t like it, but she liked the sweeties. I said to her that liking sweeties was perfectly all right, but he should never have offered her sweets to do something like that.
"I said to her, ‘Why didn’t you tell Mummy?’ and she said, ‘He told me not to’.”
The judge warned the boy that he faced the possibility of a severe custodial sentence and the case was postponed to September 6.
Addressing the boy, the judge said: "I’m sure what she described is accurately what happened to her. The way she spoke was very factual and articulate.
"She was able to tell me about those experiences very well. What she describes was you making her take off her skirt and pants, telling her not to tell, it was a secret, giving her sweets."
The court was told that the boy has already been subjected to psychological assessments to see whether he can tell the difference between right and wrong.