The lights were taken from the front garden at Julia's House in Poole, which cares for children with life limiting illnesses, at 20:55 GMT on 9 December.
Police said a small light-coloured car or delivery van was spotted pulling up outside the hospice before the theft.
"We are all so shocked that someone could steal from a children's hospice," said nurse Emma Shepherd.
"We have children attending a session tomorrow and several children staying this weekend and they will now miss out.
"Many of our children have sensory challenges or difficulties with their sight, but they can all see and enjoy lights."
Sally Rowe, from the hospice, said they had received donations of lights from supporters since the theft.
PC Garry Weston said that a man got out of the passenger side of the van that was spotted and walked toward the grounds of the hospice.
Mr Weston said: "The van left the scene and the offender was seen to walk into the grounds of Julia's house before leaving carrying the lights.
"This was a despicable crime on a hospice which offers day and respite care for children with life limiting illnesses."
Staff at a children's hospice say they are devastated after thieves stole their Christmas lights.