Justice John Scurfield said Vince Li's attack on Tim McLean last summer was "grotesque" and "barbaric" but "strongly suggestive of a mental disorder."
"He did not appreciate the actions he committed were morally wrong. He believed he was acting in self-defence," Scurfield said Thursday.
Both Crown and defence psychiatrists had testified at Li's trial that he was suffering from schizophrenia and believed God wanted him to kill McLean because the young man was a force of evil.
Li was charged with second-degree murder but pleaded not guilty.
He will be institutionalized without a criminal record and will be reassessed every year by a mental health review board to determine if he is fit for release into the community.
The decision brings an end to a trial that barely lasted two days and only heard from two witnesses -- both psychiatrists -- who testified Li is mentally ill and didn't realize that killing McLean was wrong.
McLean's family has dismissed the trial as a "rubber stamp" that is allowing Li to get away with murder. They are vowing to now turn their attention to fighting the law that allows people who are found not criminally responsible to be released into the community once they are deemed well without serving a minimum sentence in jail.
Carol deDelley, McLean's mother, said her son didn't die in vain. His death highlights concerns about the justice system, she said.
"Now people are aware that there is a problem."
That Li killed the 22-year-old carnival worker -- brutally stabbing him dozens of times, beheading him and then mutilating his body -- was never in question at the trial.
An agreed statement of facts read out in court detailed how Li sat next to McLean after he gave him a smile and asked how he was doing. It was after McLean closed his eyes to listen to music on his headphones that Li said he heard the voice of God.
"Suddenly the sunshine came in the bus and the voice said, 'Quick. Hurry up. Kill him and then you'll be safe,"' Li told one of his psychiatrists. "It was so quick, such an angry voice, and I had to do what it said. I was told that if I didn't listen to the voice, I would die immediately."
Li ignored other horrified passengers as he repeatedly stabbed the young man, who unsuccessfully fought for his life.
When the bus pulled over near Portage la Prairie, Man., Li was engrossed with stabbing and mutilating McLean's body. Passengers fled the bus and stood outside.
Li tried numerous times to leave the bus but he was locked inside and continued methodically carving up McLean's body. Police said McLean's body parts were found throughout the bus in plastic bags, although part of his heart and both eyes were never found and were presumed eaten by Li.
The victim's ear, nose and tongue were found in his pocket.
God told him to cut up McLean and scatter his body parts around the bus, Li said.
"God told me to do it. Otherwise it would come back to life very quick and kill me. So I cut it up to make sure he couldn't come back to life ... God told me to cut off his head, so I did."
Li tried to escape from the bus through a window and was taken into custody.
After that, blood smeared on his face from the attack, he politely apologized to police and pleaded with officers to take his life.
With files from Canadian Press and CTV Winnipeg
