Police allege Edwin Dobbin, 82, was shot dead some time after he disappeared from southwest Sydney in late September.
Nearly a month later, detectives charged a 67-year-old with killing the elderly man and disposing of his body.
The accused killer, who police said knew Mr Dobbin, was arrested at a home in Smithfield on Thursday after allegedly telling authorities conflicting accounts of the elderly man's disappearance.
Following the arrest, police began searching a semi-rural property in the Hawkesbury region, northwest of Sydney, where they believe Mr Dobbin's body is buried.
Authorities said they would continue the search for his remains on Friday.
The accused man was also charged with hindering an investigation into a serious indictable offence and the unlawful disposal of a corpse.
He was refused police bail and is due to appear at Fairfield Local Court on Friday.
Two missing-person appeals were issued for Mr Dobbin after he was last spotted at Leppington, about 80km from where the search from his body was taking place, early on the morning of September 25.
Police and his family said they held serious concerns for his welfare due to medical conditions that required medication.
He might have been seen at two locations in southwest Sydney on the day of his disappearance, including near a petrol station at Prestons.
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