The woman accused of fatally stabbing two other women from Toronto in the heart of Atlantic City's tourism district Monday morning suffers from schizophrenia, according to her family.

The tourists were fatally stabbed in broad daylight on Monday morning.  Antoinette Pelzer, 44, was arrested by a police officer who witnessed part of the attack. She was held in custody overnight and made a court appearance Tuesday in Atlantic City.

She has been charged with two counts of murder. Her bail was set at $1.5 million.

Atlantic City police told CBC News on Tuesday that the two victims, aged 47 and 80, were from Scarborough.

Their names have yet to be released. It is not immediately known if the two are related.

Pelzer had been living in an Ohio shelter until December, when her mother brought her back to Philadelphia, said Pelzer's aunt Nadine King, also of Philadelphia.

Pelzer has long suffered from schizophrenia and had been homeless since January, King told the Associated Press, adding she had seen her niece out "begging for money."

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Antoinette Pelzer, 44, has been arrested and held in custody by Atlantic City police. (Atlantic County Department of Public Safety)

King did not know how long her niece had been in Atlantic City, which has long been a magnet for the homeless, some of whom are bused here by welfare agencies from other counties and cities.

Gladys Pelzer, the defendant's mother, told WPVI-TV in Philadelphia that the stabbings apparently occurred while her daughter was trying to get money to buy cigarettes.

"I feel sorry about the people she hurt because all she wanted a cigarette. That's what this was all about," she told the TV station.

Attacks apparently unprovoked

The attacks occurred just after 10 a.m. ET near the Bally's Atlantic City hotel.

Atlantic City Police officer Jacob Abbruscato was patrolling the area on Pacific Avenue in a marked patrol car when he saw one woman stabbing another. He got out of his cruiser, drew his gun, and ordered her to drop her knife. The suspect complied and Abbruscato arrested her.

Witnesses told police the suspect tried to steal one of the victims' purses and that the attack appeared to be unprovoked.

Pelzer was initially charged with two counts of aggravated assault and weapons offences, but those charges were upgraded to murder .

Both women were stabbed multiple times in their upper body area, police said. The two were taken to nearby AtlantiCare Regional Medical Center campus, where they died.

Toronto police have been contacted by New Jersey state police to see if they can reach out to family in Scarbourough.

With files from The Associated Press and The Canadian Press