WARNING GRAPHIC DETAILS: A 69-year-old grandfather has been decapitated after he tried to protect his wife during a domestic dispute at his south-west Sydney home.

Toufic Zahab's 42-year-old son has been charged with murder and refused bail.

Relatives said Zahab's schizophrenic son arrived at the duplex on Stacey Street in Bankstown yesterday asking to stay the night.

7News has been told the man's elderly mother made up a bed and the family went to sleep.

But early Thursday morning she allegedly woke to find her son burning her with a candle, calling her "the devil", and attacking her.

As she tried to get away her son reportedly pushed her down a flight of stairs. It's believed a scuffle broke out between the son and his father.

7News has been told that the couple's son allegedly picked up a brick and bludgeoned his father in the head, before using a knife to decapitate him.

Police arrived to find the scrap metal dealer's body inside the lounge room of his home at about 6am this morning.

"The scene itself is quite disturbing," Acting Superintendent Glen Fitzgerald said.

"It's been a difficult morning for both the family and the police."

It's believed two young children were inside the house at the time of the attack, and may have witnessed the incident.

The scene where 69-year-old Toufic Zahab was allegedly bludgeoned to death and decapitated. Photo: 7News More

Mr Zahab's Grandson, Abdul Elish, says his grandmother is devastated.

“She hasn’t comprehended what’s happened, but she’s very upset,” Mr Elish said.

Police are looking into whether drug abuse played a part in the attack.

One of two northbound lanes of Stacey Street is still closed at the intersection of Macauley Avenue, and traffic along Fairford Road is heavy.

Drivers are being told to use Canterbury and King Georges roads as an alternative route.