Parents and caregivers are advised to stop using the KidCo Peapod for infants under 12 months of age.
The federal department says the reports both involved two infants who had rolled over and got their faces trapped between the mattress and the side of the product.
Health Canada says the safest place for an unsupervised infant to sleep is in a crib that meets current Canadian safety regulations.
A bassinet or cradle that meet Canadian regulations are also safe until an infant reaches the maximum weight recommended by the manufacturer or until the baby can roll over, whichever comes first.
Health Canada says infants should never be put to sleep unattended in products not specifically designed for that purpose, such as carriages, strollers, car seats, playpens, infant swings and bouncers.