Trump, who has visited children at the hospital each year during her time as first lady, continued the tradition despite the coronavirus pandemic and record cases in Washington, DC.
The first lady arrived in the hospital's main atrium wearing a mask. When she took her seat in front of a tree, she removed the mask. Though she practiced social distancing, the hospital's policy specifically requires all visitors to wear a mask.
"Everyone must wear a mask at all times while in any Children's National facility to prevent the spread of COVID-19," the hospital's policy says.
That includes "wearing a mask when entering any Children's National building, as mandated by area officials. This includes all public places, such as the hallway and cafeteria," and "wearing a mask at all times when you are around other individuals."
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The first lady's office did not immediately respond to CNN's request for comment on why the first lady removed her mask and whether she got special permission to do so.
Children's National spokeswoman Diana Troese cited Washington, DC, health regulations -- but not the hospital's own policy -- in response to a request for comment.
"Our number one priority at Children's National Hospital is the safety of our patients, families and employees. Under DC Health regulations, wearing a mask is not required when a person is giving a speech for broadcast or an audience, provided no one is within six feet of the speaker," she said.
"In the case of today's visit which was broadcast to our 325 patients, while the First Lady did remove her mask while she read a story, she was more than 12 feet away from others in our large atrium. All other people in that space were wearing masks. The remainder of her visit, she wore a mask," Troese added.
Trump was diagnosed with coronavirus at the same time as President Donald Trump in early October.
But health experts say it's still unclear how long antibodies offer protection and recommend still wearing a mask.
"Even though the President himself was infected and he has likely antibodies that likely would be protective, we're not sure how long that protection lasts," Dr. Anthony Fauci told ABC News on Tuesday.
The event was significantly scaled back from previous visits. Most children watched the reading from a live stream, but Trump arrived with 6-year-old Riley Whitney and 8-year-old Sophia Martinez, who were seated on the floor in front of her as she read.
The other attendees, including some key members of hospital leadership, wore masks, with some wearing protective face or eye shields.
"It is wonderful to be here. This is one of my favorite events during the holiday time and I'm very excited and looking forward to reading a book," she said as she arrived.
"I'm thinking of you all. Stay strong and well and Merry Christmas and happy holidays," she said before reading a children's book, "Oliver the Ornament Meets Marley & Joan and Abbey."
Trump kept her mask off as she exited to "All I Want for Christmas is You" by Mariah Carey.
Later Tuesday, she participated in a game of holiday-themed bingo. She stood at a podium in a studio calling out numbers to a microphone, again practicing social distancing, but keeping her mask on the entire time.