Peter O'Ryan, 48, was arrested on Tuesday night after police were called about a man suspiciously loitering around Tyers-Walhalla Road, near where the attack happened, just before 9pm.
O'Ryan was at his family's home in the small Gippsland town of Tyers, in Victoria's east, on Saturday when an argument broke out just after midday, police allege. He then allegedly attacked his brother with an axe before turning on his elderly mother and father.
He fled the scene on foot, sparking warnings for the public to stay vigilant.
Victoria Police Detective Senior Sergeant Rodney Findlay described the alleged attack as the worst he had seen.
"I've been working in family violence a long time," Det Sen Sgt Findlay told reporters on Sunday.
"This is some of the most serious offending I've ever seen."
O'Ryan's father, 77, and brother, 47, were airlifted to hospital with life-threatening injuries and remain in critical condition.
The pair required immediate surgery and remained in intensive care at the Alfred Hospital.
His mother, 74, was transported to hospital with critical injuries and remains in a stable condition.
She had only been able to provide sparse details in between treatments of what had occurred.
"Over the past three days, police conducted numerous searches for the Tyers man who will now be interviewed in relation to the incident," police said in a statement.
"Police thank the public for their assistance in locating the man."
11°C