Michael Striker, 48, who killed a man in Sydney in 2002, was arrested by police at a Parramatta hotel on Wednesday.

He had been receiving psychiatric treatment at the hospital.

A Western NSW Local Health District spokeswoman said the incident would be examined.

"Now that the patient has been located, this case will be reviewed by the Mental Health Review Tribunal," she said.

"NSW Health cannot discuss specific circumstances of any patient who is appearing before the Tribunal due to the requirements under the Mental Health Act 2007."

The Mental Health Review Tribunal has powers that enable it to conduct mental health inquiries, make and review orders and hear some appeals about the treatment and care of people with a mental illness.

Police said Mr Striker was last seen leaving a Peisley Street shop about 10.30am on Monday and was later seen at Bathurst.

They said they were notified about 2pm on Monday after the man failed to return to Bloomfield.

"Following enquiries and a public appeal, police received information the man was at a hotel on Anderson Street, Parramatta, about 11am on Wednesday," a police statement said.

"Officers from Parramatta Police Area Command arrested the man who is expected to be returned to a facility."

Police said it was now a matter for NSW Health.

On June 3, 2002, Mr Striker, who was known at the time as Michael Sorell, killed a man outside an electronics store in Sydney.

In 2003 Mr Striker was found not guilty of murder by reason of mental illness.