Craig Hackett said the swimming champion had gone from someone with "the world at his feet" to the point where "we don't know what's going to happen - it doesn't look encouraging."
Standing outside the Gold Coast property from which the dazed-looking star was earlier handcuffed and driven away in a police car, Craig admitted the family no longer knew how to deal with his brother's erratic behaviour.
"He's a danger to himself. He's a danger to the community," Craig said.
"The Grant Hackett that Australia fell in love with, they can still have that affection towards him," he said. "This is not Grant Hackett.
"This is a completely different person. I don't know this person, my mum and dad don't know this person. He's there in body, but he's not there in mind, soul or spirit."
The troubled star hung his head down to the back seat of the police car as he was taken into custody around midday, before raising his handcuffs to a window and making the "shaka" sign, a friendly "hang loose" gesture associated with Hawaiian surf culture.
He was released without charge about three hours later, telling waiting media he was "not great".
The family reported a domestic violence incident, although no one was said to have been harmed, after the 36-year-old "flew into an uncontrollable rage." Witnesses said Hackett was "going off" and stabbing a knife into a chopping block before his arrest. He was apparently asleep when eight officers arrived and arrested the talented distance swimmer.
His father Nev said he was forced to call the police after Hackett, who had been drinking heavily, became abusive and aggressive.
"Grant's got a medical problem and it manifested itself here this morning ... he was raving and ranting," his father told the Gold Coast Bulletin. "He's been receiving treatment from a doctor. He's big and powerful when he's not happy.
"We decided he needed some treatment but there was no way he was going to go and get treatment this morning so we called the police.
"The only way the police can do anything under the law of the land is to arrest him for domestic violence."
Nev said his son "didn't even make any threats but was not what you say is a normal person", remarking that his doctor was likely to take him to Pindara Private Hospital when he is released.
Craig said the family had "done everything that we can but now it's kind of out of our hands" as father and son faced the cameras outside the Mermaid Waters home.
A former policeman himself, Nev said officers settled his son down before convincing him to go with them.
"We've got a long battle," he said of the family's challenge to help their struggling son. "We'll do anything to help him. Anything at all but it's hard for people with this sort of problem."
Craig said his parents were "nervous wrecks" after dealing with his brother's mental health issues for a long time. "This is now a chronic problem and it looks like it's not going to go away in a hurry," he said. "From a mental health perspective I hope something can be done."
Queensland Police said in a statement they had arrested a man following a disturbance at an address in Mermaid Waters at around midday.
Swimming Australia President John Bertrand told SEN radio's The Run Home the incident was "a tragedy". He said he had spoken to the star before Christmas and the former Olympian had been excited about studying for an MBA and his business interests were going well.
"For him to fall in a heap like this, it's a real setback for Grant," he added. "It's still clearly a long road."
Bertrand said Hackett had a "coterie of friends, including Swimming Australia" and was supported by an excellent network of health professionals. He said he wasn't aware of a drugs connection but that the star was "extremely sensitive to alcohol, much more dramatic than most people and that's always been the reality of just the way his body reacts."
Bertrand said he didn't believe Hackett was involved with drugs but "clearly he's got demons".
He observed that many sporting greats struggled with the challenge of finding a new passion that captured their imagination after the intensity of their careers.
One of the greatest distance swimmers in history, Hackett is best known for winning the men's 1500 metres freestyle at the Sydney Olympics in 2000 and at Athens in 2004, and captained the Australian swimming team for three years from 2005.
He retired after finishing with silver at Beijing in 2008, making a brief and unsuccessful comeback attempt in 2015.
The 10-time world championship gold medallist has faced a very public struggle with his demons in recent years.
In April last year, Hackett apologised after being accused of "forcefully" groping a passenger and "tweaking" his nipple on an interstate flight following a dispute over a seat being reclined too far.
Hackett phoned his alleged victim to apologise for his actions on the flight from Adelaide to Melbourne. He pledged to donate a sum of money to a charity of the man's choice.
"I seriously and genuinely regret my poor behaviour," he said in a statement. "I have stuffed up more than once and am working on these issues."
It came a couple of years after the former Olympic hero spent time in a US rehab clinic where he was treated for a sleeping pill addiction after photos emerged of him looking lost with a singlet wrapped around his waist as a pair of shorts.
Before that there were two other high-profile controversies. In 2011 he trashed the Melbourne apartment he shared with then wife Candice Alley, who was home with their twin sons.
Eight police cars were called to the luxury apartment after a distressed 000 was made to police.
Pictures emerged of the damage caused in the apartment - which included some of the items his wife most cherished like her piano, a dresser and framed photographs. A bedroom door was also destroyed, as were some of the children's toys. The couple later said they were dealing with some "private issues".
Months later, Hackett had an alcohol-fuelled night at Crown Casino during and after the Logie Awards in April 2012, where he was asked to leave a Channel 9 party and fell asleep in a stairwell.
At about 3am, the Olympian was approached by bouncers at a nightclub in the casino complex and told he should "call it a night". Hackett is said to have fully co-operated with staff and left promptly without an escort.
The following morning, Channel 9's Today aired footage of a sweaty Hackett at the party struggling to form a sentence. Asked by a reporter for his favourite song, Hackett stumbles: "I don't know my favourite song 'cos there's are so many favourite songs. 'Cos if I could name one I would."
He and Alley split a month later and he was dumped from his ambassador role at the Alannah and Madeline Foundation which aims to protect children from violence.
- With wires
