Two women aged 42 and 64 were injured, but later discharged from Wellington Hospital.
A woman from the Broderick Rd house where the stabbings started called police at about 8.30pm last night.
A local resident then flagged down police, who in the house found four people suffering stab wounds, including the man who died shortly after.
The 25-year-old woman was found in a property separate from both the family home and the stabbed neighbour's house.
Detective Senior Sergeant John van den Heuvel said police were making investigations at all three properties.
A team of 42 police staff as well as scientists were involved in the investigation, code-named Operation Neptune.
A knife was recovered from Broderick Rd last night.Police investigating the homicide said the two women already discharged from Wellington Hospital and were receiving "appropriate support" today."
Given what we know so far of the incident and the relationship between the victims and the woman in custody, we are satisfied that this was an isolated event and that there is no ongoing risk to the wider community," Mr van den Heuvel said.
However, he said police still wanted to talk to people who were in Broderick Rd in the areas between Cortina Avenue and Truscott Avenue last night.
"I can also assure the victims and the community that there will be a thorough and detailed investigation into what happened. This was a very tragic incident and our thoughts are with the families of those involved, who have asked for privacy at this very difficult time."
Mr van den Heuvel said the 25 year-old woman was likely to face "serious charges".
Police said the woman was helping with the investigation.
Police Commissioner Mike Bush said the incident was a "real tragedy".
"Our thoughts go out to the relatives and friends of the family involved in the homicide in Johnsonville last night...Cases such as these reflect the real tragedy our staff deal with and I want to thank all those involved for their professional response," he said.
