Brent Allan Warren, 44, admitted to killing his son at the family home in July 2011, saying he did so to save his son's soul and his death would transform the world to a loving, peaceful place.
A Supreme Court judge agreed with psychiatrists that Warren lacked the understanding that killing his son, Jonathan, was morally wrong.
However, the boy's grandfather Ben Bedarf calls the verdict "depressing."
"There's no winners in this case," he said. "There's no closure for us either because on a yearly basis, we are going to have to appear before the board to try to keep him locked up, or keep him hospitalized."
Warren has been remanded to the forensic psychiatric facility in Port Coquitlam.