The little girl, originally reported to be around five or six years old, is under two and was looked after by Hsao while her parents were at work, Vancouver police confirmed Tuesday.
Police say the suspect, who was shot by police at the scene, remains in hospital under guard and under arrest for murder and attempted murder, but charges have not yet been laid.
Police were called to the apartment shortly after 10.30 a.m. PT on Monday, after receiving reports of a small child crying, a man yelling and blood on the walls of the apartment building hallway.
On arrival, a 33-year-old man challenged police with a weapon, and was shot and injured by officers.
A woman with apparent multiple injuries was declared dead at the scene, and her granddaughter was taken to hospital.
Scene was a 'bloodbath'
According to a neighbour, one attending paramedic who described the scene as a "bloodbath," said the victim had been stabbed many times all over her body.
Gurinder Sodhi owns a tax and accountancy firm in the next building, as well as units in the apartment complex. He said that the suspect lived in the apartment with his mother who spoke little English.
Another neighbour, who lives across the hall from the apartment where the homicide took place, said that the deceased woman was known to babysit her granddaughter.
He said the suspect had some mental health issues.
"He doesn't really say anything. He tries to stay away from people. He won't get in an elevator with you or anything like that."
The incident is Vancouver's third homicide of 2014.