A murder investigation has been launched following the death of the 17-year-old girl and the serious injury to a woman.
Gwent Police said an 18-year-old man from Newbridge was arrested at around 07:15 GMT on suspicion of murder and attempted murder in connection with the incident in Cefn Forest, near Blackwood, Caerphilly.
The girl was pronounced dead at the scene, while a 38-year-old woman from Cefn Forest is being treated in hospital.
Armed police arrived at a property on Wheatley Place on Thursday after reports of two people being seriously injured.
Detective Superintendent Philip O'Connell said that following the arrest, police are not seeking anyone else in connection with the incident.
They said, "We understand that reports like these can be concerning, and it's likely that residents will see an increased number of police officers in the area while we investigate further."
They appealed for anyone with information to contact them.
A spokesperson for the Welsh Ambulance Service said that ambulances and two air ambulance helicopters were dispatched to the scene at 7:23 a.m. on Thursday.
On Thursday afternoon, two police officers were guarding the door of a semi-detached house behind a police cordon.
Crime officers in white paper suits were moving in and out of the house with equipment, checking the inside, while a police dog searched the area in front of the house.
A large area of the street surrounding the house was cordoned off with police tape. The street was very quiet, with very few residents coming and going.
Two teenage girls approached the officers through the police cordon, one of whom was crying.
Neighbor Alun Phillips, 77, told he was working overnight and woke up this morning to the sound of banging on the door.
He said he didn't know the people in the house, who were "self-isolating."