Twisted James Riley was bought to justice when the young victim told his parents of his ordeal.
The 42-year-old was arrested at the nursery in Coventry and an iPad found by police at his home contained 181 indecent images and videos of young boys.
Another 19 images were discovered on his laptop.
Riley, of Widdrington Road, Radford, was jailed for 12-and-a-half years at Warwick Crown Court on Wednesday after he was convicted of sexually assaulting a child and possessing indecent images of children.
Riley denied he had a specific sexual interest in children instead claiming he viewed this material because he liked to imagine himself as the abused child in the photos.
Jailing him, Recorder Anupama Thompson told him: “You have been convicted by the jury on overwhelming evidence of your behaviour towards a three-year-old boy who had been entrusted into your care.
“Day after day, up and down this country, parents take their children to nurseries, and trust that they are leaving their children with people who they can trust.
“Your behaviour was against everything any parent would expect someone in your position to do.
“Fortunately, he is an articulate little boy who immediately told his parents what had happened, and they were able to take action to ensure nothing similar happened to him again or to other children in your care.
“You had a sexual interest in young children, yet you still went to work every day to a place where you had unfettered access to young children. You were in a position of trust which you abused.”