Police were called to a house in Hither Green, southeast London, at 12.45am to reports of a break-in in progress.
The occupant had found two males inside his home.
The homeowner was then forced into the kitchen by one of the suspects armed with a screwdriver while the other went upstairs.
During a subsequent struggle, one of the males found inside the property sustained a stab injury to his upper body, police said.
He was taken to hospital but died soon after 3.30am.
Police initially arrested the 78-year-old on suspicion of grievous bodily harm but they have since rearrested him on suspicion of murder.
A Met Police statement said: “The homeowner suffered bruising to his arms. His injuries are not life threatening.
“He was taken to a south London police station where he remains at this time.
“The second suspect in the burglary fled the scene prior to police arrival and remains outstanding.
“The Met’s Homicide and Major Crime Command investigate. Enquires are ongoing.”
The dead man’s next of kin have been informed but formal identification is yet to take place.
A post mortem examination is expected to take place in the next few days.
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Police have appealed for anyone with information to get in touch.