One man is under arrest and another is being sought by police in an interstate manhunt in connection to the murder of a Canadian couple killed in a lakeside community in Mexico.

Nina Discombe, 72, and Edward Kular, 84, were found dead Sunday by their gardener in a pool of blood in the living room of their home in the town of Ajijic. Discombe had been stabbed in the stomach with a kitchen knife, and Kular had been beaten on the head with a small statue, Mexican officials say.

On Wednesday, Mexico's Jalisco State Attorney General Luis Carlos Najera alleged the Ontario couple's home had been broken into by two brothers. The pair of robbers had expected to find Discombe and Kular asleep but they were startled to find them awake.

Fearing they would be recognized, both Discombe and Kular were killed, Najera alleged.

Najera said the man who was arrested is the brother of a construction labourer who worked near the couple's home.

"They were in the living room when they arrived. And when the lady sees the brother, he knows the lady (will) tell…he knows that the lady knows the brother (and) he decides to kills the couple," Najera told The Canadian Press.

Najera alleged the construction worker had seen the couple buy a big-screen television, and plotted a robbery with his brother, who had just been released from prison.

Police told local reporters that the door of the couple's home was left ajar and that it was ransacked. The couple's two trucks were missing and household items, money and jewellery were possibly stolen.

Police on Wednesday arrested Julio Cesar Castillo. According to authorities, he will be charged with murder.

Meanwhile, in Ontario, a relative of Kular said the Toronto man's death is like a "bad nightmare."

Both Kular and Discombe, who is from Ottawa, spent their winters in Mexico. Discombe had purchased the house in Ajijic, a town popular with Canadian snowbirds and expats, six months ago, and Kular flew down to join her last month.

With files from The Canadian Press and The Associated Press