One woman dead and another injured in 'terrifying carnage' in city

A 21-year-old man is expected to be charged after he allegedly killed a woman in an apartment before he went on a stabbing rampage in Sydney's CBD.

NSW Police Commissioner Mick Fuller said Mert Ney is expected to be charged with murder as well as serious assault after he unleashed "terrifying carnage" in the city on Tuesday afternoon.

Mr Fuller says the rampage was "not currently classed as a terrorist incident" by authorities and the "lone actor" had no links to terrorist organisations.

The 21-year-old did, however, have "some ideologies in relation to terrorism" and the Joint Counter Terrorism Team will examine if the terrorism threat needs to be reassessed.

"There was certainly information found on him about other crimes of mass casualties and mass deaths around the world," Mr Fuller said, adding the material was discovered on a USB drive.

Ney allegedly stabbed a 41-year-old woman in the back at the Hotel CBD and then tried to stab countless others as he wandered the streets before being detained near Wynyard station.

The woman is in a stable condition in hospital.

The body of a 21-year-old woman was subsequently discovered at a Clarence Street apartment with Mr Fuller stating the homicide and stabbing were linked.

Mr Fuller said four men who chased the suspect down the street before knocking him down with a cafe chair and pinning him with a milk crate, were "the highest order of heroes".

They are brothers Paul and Luke O'Shaughnessy, Lee Cuthbert and Alex Roberts.

Prime Minister Scott Morrison praised "the brave actions of those who were present" and said his "thoughts are with all those who have been impacted by this violent attack".

Mr Fuller said Ney was at the apartment for "business purposes". It's been reported the 21-year-old victim was a sex worker.

Video footage shows Ney, who was armed with a large butcher's knife, yelling "Allahu Akbar" while wandering the CBD.

The Marayong man, who has spent the night under police guard in hospital, had a history of mental health issues.

Mr Fuller was asked about reports Ney may have absconded from a mental health facility before "breaking" on Tuesday.

"If I was forced to make a call ... the evidence all points to that," he replied.

Three members of the public who gave chase and detained the attacker using chairs and a milk crate were described by the commissioner as "highest order heroes".

Superintendent Gavin Wood said the men's intervention had stopped other people from being hurt and described them as "significantly brave".

Mr Fuller said while police weren't looking for any other offenders they couldn't discount coming across other crime scenes as the investigation continues.

Australian Associated Press