Emergency services were called to Clouta Place, Emu Plains at 6.45pm today.
Videos posted to social media showed more than a dozen police cars, ambulances and the police helicopter responding to the incident.
NSW Police said officers found a man, believed to be in his 50s, with multiple stab wounds to his upper body.
He was treated by NSW Ambulance paramedics but died at the scene.
A 31-year-old man was arrested at the scene and taken to Penrith police station.
Police set up a crime scene and began investigations.
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