Brian Farmer, 58, of Long Branch was arrested Wednesday. In addition to two counts of first-degree murder, he faces charges of sexual activity with a child.
Bail was set at $2.5 million cash only.
Investigators said that Joan Colbert, 62, and Veronica Roach, 10, were killed July 30 at Colbert's apartment in Long Branch. Their bodies were found the next day.
Farmer was allegedly taking pictures of the girl when his cousin discovered him. Prosecutors said he strangled both.
Susan Miching, an investigator with the Monmouth County Prosecutor's Office and friend of Colbert, called her a "wonderful and giving" person and a victim of a "senseless" crime. She said Roach had been in Colbert's care since she was a baby.
"He's done it before, or something close to it," Miching said.
Farmer served a prison term for holding his girlfriend and her teenage daughter hostage in 1995 and sexually assaulting the girl.