The owner, a 55-year-old woman, was stabbed to death and her jewellery stolen at her home in the northern city of Agra on February 20.
The woman's relatives grew suspicious when her caged bird became agitated whenever her nephew, Ashutosh Goswami, was in the home or his name was mentioned.
The family started calling out different names to the parrot, who stayed silent until the nephew's name was used, said the woman's brother-in-law Ajay Sharma.
"Whenever the name of Ashutosh was taken, the parrot shrieked and behaved abnormally and gave sufficient indication of (him) being involved," Sharma said.
"This information was passed to police," Sharma told AFP.
The nephew, 35, who also had a bite mark on his hand from the woman's dog, was arrested and charged on Tuesday along with an accomplice after the murder weapon and the jewellery were recovered, a local police officer said.
Shalabh Mathur, senior superintendent of Agra police, acknowledged the bird called "Heera" -- which means diamond in Hindi -- proved useful.
"We got a lot of help from the parrot to zero in on the murderer," Mathur was quoted as saying by the Press Trust of India news agency.