Hayden Kidd, 22, believed Shirley Kidd was his abusive former stepfather when he attacked her with a garden pick at her Darley home in Melbourne's outer west in May 2022.
He was initially on trial for murder but the jury was discharged after two psychiatrists found he did not have the intent to kill because of his psychosis.
Kidd instead pleaded guilty to the charge of manslaughter.
Justice Michael Croucher on Thursday described the case as "horrible" as he sentenced Kidd to five years behind bars.
Members of the Kidd family did not want to comment outside court. (James Ross/AAP PHOTOS)
Kidd will be eligible for parole after two years and six months but he's already served just over two years in pre-sentence detention.
Justice Croucher made an unusual request to the Adult Parole Board to release Kidd as soon as he was eligible, saying there was a risk he would be institutionalised in custody.
In his sentencing remarks, the justice detailed the years of sadistic abuse Kidd suffered at hands of his former stepfather.
The man burned Kidd with a cigarette lighter, choked him and tried to drown him in a toilet, all while he was a young boy.
Kidd started living with his grandparents on-and-off from 2015, seeing their home as a sanctuary away from the violence he had experienced.
On the night of the killing, Kidd smoked cannabis on his grandparent's verandah before heading to bed.
He woke in a drug-induced psychosis and went to his grandmother's bedroom where Mrs Kidd was sleeping alongside his seven-year-old cousin.
Genuinely believing the boy was his younger self and Mrs Kidd was his abusive stepfather, Kidd picked the seven-year-old up and carried him away to the garage.
Mrs Kidd chased after him and he confronted her with a garden pick, striking her four times to the head in front of the young boy.
Kidd left the weapon lodged in his dead grandmother's head he as exited the garage, telling his grandfather as they crossed paths that he would "sleep well tonight".
Justice Croucher found Kidd was in an "utterly deluded state" and he acted on his "confused misidentification".
As a result of his psychosis, the justice determined Kidd's moral culpability for the killing was either very low or almost non-existent.
Justice Croucher also took into account Kidd's young age, his lack of prior convictions and the clear remorse he held.
Reports from a psychiatrist and Corrections Victoria also noted Kidd was at risk of institutionalisation in custody.
Justice Croucher said he considered that risk, as well as the additional punishment Kidd experienced for killing a beloved family member.
"I know there's nothing this court can do or say to lessen (the Kidd family's) grief," the justice said.
"The sentence imposed does not reflect (Mrs Kidd's) life."
Kidd closed his eyes as he was handed his jail term.
Members of the Kidd family declined to speak to media as they left the court.
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