By evening, RCMP said six-year-old Taya Meisel and her 12-year-old sister, Talisha, were located in Boston Bar, B.C., about 215 northeast of Vancouver.
Their mother, 48-year-old Trina Meisel, who does not have legal guardianship, faces two counts of abduction.
Acting on information from the public, police said they located the three and took them into custody without trouble.
"The two girls are OK and investigators are working with the Ministry of Children and Family Development with respect to their care," B.C. RCMP Sgt. Rob Vermeulen said in a news release.
Alberta RCMP said relatives of the girls were en route to British Columbia to pick them up.
Insp. Tony Hamori said Trina Meisel had been taken to Hope, B.C., for processing before being returned to Alberta to be formally charged.
He also said the girls were taken to a hospital as a precaution but appeared to be in good health.
The alert was cancelled just hours after police in Alberta warned that their investigation led them to believe the situation had "become desperate" and the girls could be in grave danger.
Mounties first issued a warning Monday after the girls were discovered missing just before 11 a.m. MST. An arrest warrant was then issued on Tuesday in connection with what was believed to be a parental abduction.
On Wednesday morning, police heightened the search to an Amber Alert after a "confirmed sighting" they said occurred Monday afternoon in Golden, B.C.
RCMP Insp. Gibson Glavin, a senior officer in southern Alberta, said later in the day that the scenario hadn't met all criteria required to activate the Amber Alert for two days.
"We did not have one of the four criteria, which was belief that the children were at risk of serious bodily harm or death," he said at a news conference not long before the group was located.
"What changed was (Wednesday) morning, information came to the investigator's attention that caused him to believe the children could be at risk of serious bodily harm or death."
Hamori later explained that information stemmed from comments Trina Meisel allegedly had made to people she knew.
Police began investigating after the girls disappeared from their elementary school in Brandt, near Vulcan, south of Calgary.
It's alleged they sneaked out of school to join their mother, who is the non-custodial parent.
Police issued a plea for Meisel to come forward, when she was believed to be travelling across B.C., possibly towards the Lower Mainland or Vancouver Island.
Hamori said police in Alberta had been communicating extensively with all police forces in western Canada since the investigation began.
The RCMP detachment in Ladysmith, on the southeast coast of Vancouver Island, was first advised the family could be headed west on Tuesday based on information posted on Facebook.
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