Vincent Li, 40, didn't appear in court in Portage la Prairie on Monday but his court-appointed defense team said doctors at the psychiatric center where he is being held said Li understands the second-degree murder charge and the consequences.
A trial date is to be set Nov. 6, the Winnipeg Free Press reported.
Defense lawyer Alan Libman said after the hearing that the "sole issue" in the case is Li's state of mind during the July incident.
"If someone commits an offense while suffering a disease of the mind and they don't know their actions are wrong, they can't be held criminally responsible," Libman said.
In the attack, a sleeping 22-year-old man was stabbed with a machete near the back of the bus. After passengers evacuated the bus, the victim was beheaded and the suspect was allegedly seen eating part of the victim before he was arrested.