The boy was walking with his mother in Lincoln Road at around 2.20pm on Tuesday when a passenger in a car tried to grab hold of him.
Police say his mother intervened and the car drove away towards the town centre.
The child was not hurt during the incident.
A spokesman for West Midlands Police said: "We are investigating a report of suspicious behaviour in Walsall, at about 2.20pm on Tuesday, November 24.
"It is understood a passenger in a white hatchback tried to grab hold of a child as they walked on the pavement.
"Fortunately his mother intervened and the car drove away towards Walsall town centre.
"The child was not hurt and our enquiries are continuing with CCTV from the area being collated and reviewed."
Anyone with information can call West Midlands Police on 101, quoting crime number 20WS/291129Q/20.
Alternatively, call Crimestoppers anonymously on 0800 555111.