A couple walking in Kirkleatham Woods, Redcar, heard whimpering and found the terrier-type animal in a mound of earth at about midday.
It was rushed to a vet but its injuries were so serious it had to be put down.
The RSPCA said more than one person would have been involved.
Inspector Nick Jones said: “In all my ten years working for the RSPCA, I have never known anything so horrifying and inexplicably cruel.
“It’s likely more than one person was involved due to the force needed to inflict such an attack.”
The dog was a white, scruffy-looking terrier type with a curly coat – possibly a Jack Russell or West Highland Terrier cross-breed – aged about seven years old.
Anyone with information is urged to come forward.