Nyomi Fee, 28, said another boy had injured Liam in the days leading up to his death.
However, Nyomi Fee accepted at the High Court in Livingston that she had not sought medical help for Liam when she knew he had a leg injury.
Nyomi Fee and Rachel Fee deny killing the two-year-old at a house near Glenrothes in Fife in March 2014.
The pair also face allegations that they neglected Liam and abused two other children, one of whom they blame for killing Liam, while in their care over a two-year period.
The women, who are both originally from Ryton, Tyne and Wear, deny all the charges against them.
Nyomi Fee said in the days before Liam's death another boy had told her that he had stood on the toddler's legs and thrown him across the room.
She said in another incident Involving the same boy Liam had fallen out of the cot and after that she noticed he was not bearing weight on his leg.
She checked symptoms on the internet, but did not seek medical advice, and accepted in this she was guilty of neglect.
When asked if she had caused the fatal injuries to Liam, Nyomi Fee said: "No, never."
Nyomi Fee said she played no part in inflicting his fatal injuries and was "in complete shock" when she realised he had died.
Nyomi Fee told jurors she tried to resuscitate the two-year-old but was "gutted" when it became clear that "he wasn't coming back".
She denied concocting a story about what happened that night with another child and insisted she had dialled 999 for an ambulance within two or three minutes of discovering Liam.
Fee, the first witness to give evidence for the defence, was in the witness box for a second day.
Questioned by her defence QC Mark Stewart, Fee told how she went into Liam's room on the Saturday in question and found his buggy in a different place, and he was "very white".
She said: "I picked him up by his arms and tried to make him wake up, and I screamed on Rachel."
She said she put Liam on the floor and was "constantly trying to get him to wake up".
Fee said she phoned 999 within "two to three minutes tops" and suspected that Liam was dead.
"He was really white, he was lifeless, there was nothing," she told the court.
Mr Stewart asked whether, in the time she was in the room with Liam, she had ever "caused him any injury or ill health by any act or deed".
"No, none whatsoever," Fee replied, adding she heard a child in the house say they had strangled Liam.
Mr Stewart asked about her emotions at the point when she found Liam.
"I was absolutely devastated," Fee told jurors.
On her efforts to resuscitate the child, she added: "It wasn't working. He wasn't coming back, I'd lost him."
Nyomi Fee was giving evidence in her defence.
The prosecution case closed last week.
One of the women accused of murdering toddler Liam Fee has told the trial she did not assault the child.