The Old Bailey was told that Ehri Inweh, 22, took a knife from the kitchen at a hostel run by Mind in Kingston, Surrey, and slashed 23-year-old Katie Sullivan 14 times.
John Kelsey-Fry, for the prosecution, said that Inweh, who had a history of mental illness, told police she believed Miss Sullivan was an 'Anti-Christ - a demon - and as such was threatening her life'.
The defence did not dispute that Inweh killed her, he added. 'It is an unusual case. The defence is one of insanity.' She was suffering a defect of reason caused by abnormality of mind.
After the trial, Miss Sullivan's family called on the Government to enforce medication for psychiatric patients in the community. They said staff at the centre had not been told all the details of Inweh's tendencies.
In July 1991 she was detained under the Mental Health Act after attacking a patient in hospital. Inweh was to receive a monthly injection and prescribed tablets after she arrived at the centre. But she had not had the injection when it was due two days before she killed.