Emergency services arrived at a Tamworth home in northern NSW about 4.30pm on Saturday where they found a 47-year-old man suffering critical injuries and a 55-year-old male armed with a knife.
Police allege the older man inflicted significant head injuries on his younger acquaintance inside the home.
The armed man locked himself in a bedroom before climbing onto the roof of the two-storey residence.
Wearing what appears to be a long jacket or robe over a t-shirt and shorts, he began screaming obscenities at police, some heavily armed and in riot uniforms, as they tried to gain access.
Social media footage shows the man behaving erratically, running from side to side and throwing tiles to the ground, as officers try to place a ladder against an eave so they can reach him.
At one point he lunges at the ladder, pushing it off its footing.
An officer armed with a protective shield who manages to climb onto the roof chases the man before he leaps and lands on a first-floor section of roof, rolls to the gutter and plunges to the ground where he is tackled by uniformed police.
Specialist officers and negotiators had been speaking with the knife-wielding man when he fell.
He was treated by paramedics for non-life-threatening stab wounds to his chest before being taken to Tamworth Base Hospital before being transferred to John Hunter Hospital in Newcastle.
The critically injured man found inside the house was taken to Tamworth Base Hospital but declared dead on arrival.
The older man from Tamworth remains under police guard over the alleged murder of the other man, NSW Police Detective Inspector Tom Aylett said.
"(Police) secured the arrest of a male that we're going to allege was involved in the murder of someone else," he said on Sunday.
Police are looking into a range of motives, including whether drugs were involved and have located the weapon they believed was used in the confrontation.
"Two men were in the house and something has led to one of those males attacking the 47-year-old male, causing those significant injuries," Det Insp Aylett said.
"That's certainly something we'll look at, different lines of inquiry around history, relationships and a number of factors that was the motive behind it."
Police say the two men have known each other for years as acquaintances and both were known to them.
Det Insp Aylett expects charges to be laid against the Tamworth man in the coming days after they speak to him.
He defended the use of non-lethal weapons, including a taser and beanbag rounds, to coax the man down when he began wounding himself before he fell.
"We have an obligation to protect life and property, including his own (and once) he started self-harming with a weapon, we had to take appropriate action to make sure he was put into custody," he said.
Paramedics attended the confronting scene and treated the alleged offender for self-inflicted chest injuries, NSW Ambulance Inspector Tim Troon said.
A crime scene has been established as local investigators probe the incident assisted by homicide detectives.