Named by media outlets as Steven Tougher, the 29-year-old father of one was stabbed outside Campbelltown McDonald's while he and a workmate took a break towards the end of their night shift about 5.30am on Friday.
The colleague activated a duress alarm, sparking a police response in which a man wielding a knife was tasered and arrested.
Homicide detectives later charged the 21-year-old man with murder.
He was refused bail and appeared at Parramatta Bail Court on Saturday.
Outside court his lawyer Javid Faiz told reporters his client had mental health issues but understood the charges.
"I've explained the offences and he is fully aware of the gravity," Mr Faiz said.
"Police are currently at his bedside due to his mental health issues."
The victim, who had been working for the ambulance service for about a year, was assisted by witnesses at the scene but died shortly after arriving at Liverpool Hospital.
"The surgeons ... worked valiantly, albeit futile in this instance, to support our colleague," NSW Ambulance Commissioner Dominic Morgan said.
The slain man's father said his son always wanted to be a paramedic and had just been posted to southwest Sydney, Dr Morgan said.
"I've met with the family and as you can imagine personally, it's very difficult to process."
A GoFundMe page set up on Friday afternoon sought support for the paramedic's partner Madison who is expecting a second child.
"Madison is due to have her second child in a few short weeks," the page description read.
It is understood the couple intended raising their family in southwestern Sydney after he recently landed a posting in the area.
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