Neither the woman or her grandmother can be identified under terms of a publication ban.
Police charged the then-19-year-old woman with second-degree murder. Court heard she has since been diagnosed with bipolar mood disorder.
"Clearly, at the time (of the killing) she suffered a break from reality that has now been addressed through treatment," said Justice Joan McKelvey.
According to a police report, the victim and her granddaughter were in the bathroom at the victim's Pine Bluff Road home when the granddaughter knocked the victim to the floor and stomped on her head and stomach.
The victim was taken to hospital suffering severe head trauma. She died later that afternoon.
The woman, 20, is now living with her family, takes medication, and remains under the care of a psychiatrist and treatment team, court heard.
"With treatment, she can go her entire life without a recurrence of psychosis," psychologist Dr. Stanley Yaren said.
The woman sat in the court gallery surrounded by a dozen family members and supporters.
Her family "wants the public to know they love their daughter and they supported her through this whole process," defence lawyer Bruce Bonney said outside court.
The woman will be subject to annual reviews by the Criminal Code Review Board which will determine whether she can remain free in the community or should reside in a psychiatric facility.