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A family dispute has allegedly led to a tragedy with a 25-year-old man accused of stabbing his older brother to death on Victoria's Mornington Peninsula.

It is believed Jesse and Joshua Tovey got into an argument at the family property in Hastings early Monday morning before Jesse allegedly stabbed Joshua.

After the alleged altercation on Arthur Street, 29-year-old Joshua made it more than 200 metres away to an UltraTune car park where he was found with critical injuries.

Paramedics arrived at the scene but were unable to save him, with the air ambulance turned back to Melbourne.

After the alleged incident, Jesse was found in the backyard of a nearby friend's house, more than seven hours after his brother's death.

Jess Crewswell told 9News Jesse knocked on her door just after 7am asking for a shower and coffee, then went to sleep.

When he woke up, Ms Crewswelln said she told him Joshua had died.

"He was just in shock, like he didn't think it was that serious with what happened … or he didn't want to believe it … I don't know, he was in shock I reckon," she said.

Ms Crewswell thought Jesse had left her property, but hours later she said police, with the help of a sniffer dog, had tracked him to the backyard of her Kurrajong Street house.

He was then handcuffed and taken into custody, allegedly telling police they had the wrong man.

"I didn't think he'd do something like that … it's really sad," Ms Crewswell said.

Local man Evan Filius said the family would be devastated.

"Pretty hard … nobody wants anyone in that position let alone a family member," he said.

Victoria Police said overnight that a 25-year-old man had been charged with murder.

He is due to face the Melbourne Magistrates' Court on Tuesday morning.

Anyone who witnessed the incident or with information is urged to contact Crime Stoppers on 1800 333 000.

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