The man who killed Brisbane bus driver Manmeet Alisher by throwing a homemade "bomb" into his vehicle has been declared unfit to stand trial.

Anthony Mark Edward O'Donohue committed the attack at a bus stop in Moorooka, in Brisbane's south on October 28, 2016.

As the bus pulled up, O'Donohue lit a backpack containing a bottle filled with petrol and diesel and threw it at Mr Alisher, 29.

It caused an explosion and trapped 14 passengers inside the bus.

Heroic passers-by were able to kick and pull the doors open to rescue the passengers, but Mr Alisher, also known as Manmeet Sharma, could not be saved.

O'Donohue — an undiagnosed schizophrenic — was charged with Mr Alisher's murder, 14 counts of attempted murder and arson.

The case was committed to Queensland's Mental Health Court, which ruled on Friday that O'Donohue was of unsound mind during the attack.

It means he will not face a criminal trial and the charges against him will be discontinued.

On Friday, Judge Jean Dalton ordered O'Donohue be kept and treated at in a high security section of The Park mental health facility in Brisbane. In a legal first, she ruled the order could not be revoked for 10 years, the maximum time allowed.

Anthony O'Donohue under police guard at the scene of the fire bombing in 2016. ( ABC News: TV News )

Psychiatrists told the court O'Donohue was "dangerous" and was likely to suffer from his mental condition for the rest of his life.

O'Donohue was a former accountant with two university degrees, but had suffered from mental illness since at least 2003. He had chosen to go off treatment in the year leading up to the attack, the court heard.

Psychiatrist Pamela van de Hoef said O'Donohue was a conspiracy theorist who believed unions, police and governments were part of an ongoing campaign to ruin his life.

His delusional beliefs escalated to the point where he decided to target a bus driver because they were employees of the Brisbane City Council, Dr van de Hoef said.

Bus driver's smile 'prompted delusional attack'

On the morning of the attack, O'Donohue left his unit in Moorooka after shouting at a woman and walked to a nearby bus stop, carrying the homemade bomb in a bag. He then boarded the first bus that arrived, the court heard.

Manmeet Alisher was an aspiring singer and actor. ( Facebook: Manmeet Alisher )

"He was so overcome with delusional beliefs and then finally tragically believed the bus driver smiled at him, and it indicated the bus driver knew of the conspiracy," Dr van de Hoef said.

"If the bus driver hadn't smiled at him, who knows what would have happened."

O'Donohue then used a barbeque lighter to set off the device and threw it at Mr Alisher.

"He wanted an escape, if nobody was going to stop it he was going to make a statement to make it stop," Dr van de Hoef said.

Another psychiatrist, Dr Michael Beech, said O'Donohue had never been charged with a crime before the incident.

"He's clearly dangerous … he doesn't even believe that he needs treatment and I think he has the capacity to hide the severity of his thinking," Dr Beech said.

Sorry, this video has expired Tom Brown from the bus drivers union said safety remained a concern for its Brisbane members

Brisbane bus drivers 'still at risk': union

Lord Mayor Graham Quirk said Mr Alisher had been "part of the Brisbane City Council family" and his death had deeply affected council staff.

"The suddenness, the very tragic circumstances in which he lost his life affected us all — you wouldn't be human if it didn't," he said.

The attack prompted Brisbane City Council to agree to improve safety measures on buses, including extra emergency buttons and a new rear exit window.

Cr Quirk said the council was yet to roll out the upgrades.

"There's a range of views amongst drivers as to what they want, but overwhelmingly the majority said they want a partial [driver] barrier and that's essentially where we're heading."

O'Donohue appeared via videolink in the Mental Health Court on Thursday. ( ABC News: Sharon Gordon )

Tom Brown from the Rail Tram and Bus Union said drivers were frustrated their safety remained at risk.

"Frustrated is an understatement. The same thing that happened nearly two years ago could happen today or tomorrow on a Brisbane City Council bus, that's just a fact," he said.

"It's been a game-changer for bus drivers; on that day in October, bus driving went from a safe job to very much an unsafe job in this city.

"Drivers, whenever there is an argument with a passenger these days, drivers immediately click into fear.

"We've had bus driver safety reviews and the recommendations have been handed down by the Government and now it's the implementation period for these and we're hoping to be fully involved in the implementation of the safety review."

'Who is responsible for this murder?'

The incident rocked Brisbane's Indian community and made headlines in Mr Alisher's home country of India.

Mr Alisher's family members flew to Brisbane to attend the hearing, and they were accompanied to the court by dozens of supporters.

Friends and family of slain Indian bus driver Manmeet Alisher gather outside court. ( ABC News: Kristian Silva )

A spokesman for the family, Winnerjit Goldy, said the 10-year imprisonment was not enough.

"It should be more than that because a person like this should not be in this society for the lifetime," he said.

He said the family was angry because there was no provision to appeal against the ruling.

"Who is responsible for this murder — if he is a mentally sick person then why was he in the society?" Mr Goldy said.

"Manmeet was a great guy, he was a man with dreams, he had ambitions, and we lost everything."

Police, paramedics and firefighters at the scene of the bus explosion. ( ABC News: James Maasdorp )

He called for tougher punishments for people driven to violence by mental illness.

"A smile took a life of a person, so today if you smile on someone you don't know, you maybe live or not," he said.

Outside court, bus driver Manmohan Singh spoke about how the attack had affected drivers.

"It is part of our training that we have to smile we have to greet when someone comes on the bus and we were very happy with that, but you can imagine now how we are doing our jobs after that," he said.

"We are always in fear. If someone comes with a backpack, we are in fear."

The damaged bus in the Brisbane suburb of Moorooka after the attack. ( ABC News: James Maasdorp )

Medical experts said they believed the attack was not racially motivated.

In sentencing, Judge Dalton said O'Donohue was deprived of the capacity to know not to commit the attack.

"He said he thought the people who were persecuting him would stop him as he walked to the bus stop, but nobody did," she said.