A second man has been charged over a “gruesome” murder that police believe was the result of a drug deal gone wrong.

Officers found the victim, a man believed to be aged 29, stabbed to death about 5pm on Monday at a home in Croydon Park, in Sydney’s inner west.

Mohammad Sofwan Bin Mustafha, 32, was arrested at the scene and taken to hospital for assessment under police guard.

He was later charged with murder and faced Burwood Local Court on Tuesday.

He did not apply for bail and will return to the same court on July 30.

A second man, aged 36, who police had been searching for, was arrested late on Tuesday before being charged with murder and was refused bail to appear before Burwood Local Court on Wednesday.

“This is a gruesome crime,” Superintendent Christine McDonald said on Monday.

“The man’s injuries are horrific, and what we know from very preliminary investigations is that … we believe this is a drug deal gone horribly wrong.”

On Tuesday morning, police were still examining the quiet street as they attempted to piece together what happened.

The victim, who has not yet been formally identified, was found with multiple stab wounds to his neck.

Police were unsure of who lived at the house, who had attended before the fatal incident and the reason they were meeting,  McDonald said.

She did not detail why police believed the incident had stemmed from a drug deal.

“We don’t believe it to be domestic-related, we don’t believe it to be gang-related, but we need to work through all those steps of the investigation,” she said.

“The community down here would be shocked that something … so brutal has happened in their street.”

-AAP