Dramatic footage showed one man bravely confronting the apparent knifeman with a chair after he jumped onto a car.
Witnesses, since praised for their bravery, then appeared to apprehend the suspect in chaotic scenes - pinning him down under the chair and putting a milk crate on his head.
Police say a 21-year-old woman was found dead in a separate crime scene and confirmed it was linked to today's rampage.
They said the 21-year-old suspect stabbed a 41-year-old woman in the back, and was rushed to hospital where she is now in stable condition.
He has been identified as Mert Nay by multiple media outlets,
according to News.com.au.
Three Brits have since recounted the moment they ran to help pin the suspected knifeman to the ground.
Lee Cuthbert, Paul O'Shaughnessy and Luke O'Shaughnessy, all from Manchester, were working in the area when they heard the man attempting to stab several people outside, according to the Sydney Morning Herald.
They told the Australian paper: "We had a window open to get some air in and then we just heard the commotion [...] we looked out and saw him on top of a car wielding a knife and we all just kind of reacted from there.
"We just tried to get down as quick as we could. You don't think, you just kind of react really, it was surreal, very, very surreal.
"We all kind of chased, worked together, but it was Luke who was the real hero. He pursued him the hardest and managed to get a grip of him."
Paul, a former Bury midfielder who moved to Australia in 2008 to play for North Sydney, added: "My brother Luke managed to keep him pinned down until the police arrived.
"My brother put a crate and a chair to keep him pinned down. He didn't show any remorse at all."
