The alleged killer of a 21-year-old woman whose body was found inside a central Sydney apartment has been linked to a nearby stabbing rampage that left another woman in hospital.
NSW Police say the dead woman's body was found in the Clarence Street unit about 3.15pm on Tuesday.
By then a 21-year-old man with a history of mental illness had already been wrestled to the ground by members of the public and arrested by police.
Detectives believe that after leaving the apartment he stabbed a 41-year-old woman at the Hotel CBD and tried to stab countless others while yelling "Allahu Akbar".
NSW Police Commissioner Mick Fuller says "all evidence" suggests the 21-year-old man was involved in both the death of the woman and the nearby stabbing.
The police commissioner said at this stage it appeared the man was at the Clarence Street unit for a "business purpose".
"But it is so early in the investigation that's all we know," he said.
The Marayong man had an "unremarkable history compared to the gravity of his (alleged) crimes", Mr Fuller said, while revealing he did have a history of mental health issues.
The 21-year-old is expected to be charged with murder as well as serious assault in relation to the stabbing. At this stage, the incident isn't being classed as terrorism.
A woman was led out of the apartment building by police after 4pm and put in the back of an unmarked police car and driven away. She was dressed in black and had long dyed-blonde hair.
Police tape was strung up outside the building with officers standing guard at the door.
A man who's lived in the building for five years said he'd been told he wouldn't be allowed back inside for a number of hours.
He was shocked to hear a body had been found reportedly on the fourth floor.
Another resident said police only told her a woman was dead and she'd have to return later.
"I don't want to feel unsafe if I'm still living in this building, because we don't know what's happening," she told AAP.
A man working in a nearby coffee shop hadn't known anything was amiss until he saw the police tape outside his window.
He told AAP the area was usually "nice and quiet" and he was saddened to about the woman's death.