A much-loved family pet stolen for alleged use in illegal dog fighting has been reunited with her owners some three months after separation, police say.

Coco the cross-bred bull terrier and Australian terrier was reported stolen from her Wallsend home in the NSW Hunter region in August.

"Police began to follow a line of inquiry that Coco may have been stolen for use in illegal dog fights," police said in a statement.

"The owners of the dog later received information that the dog was possibly being held by a man from the Wallsend area who might be allegedly involved in stealing dogs for illegal dog fights."

Senior Constables Mitch Harvey and Andrew Patterson went to a property at nearby Mayfield on Wednesday and found a dog matching a description of Coco.

There was no evidence to suggest Coco had been involved in illegal dog fighting, and she was reunited with her owners.

"It was quite a tearful reunion," Senior Constable Harvey said in a statement.

"You don't get too many happy endings in policing but it's nice when they do happen."