The incident took place late last night when the attackers barged into the house of the victim at Khadgu village and attacked him with a sharp weapon, Additional Superintendent of Police Shailendra Kumar Burnwal said.
Nimai alias Sudhan Hansdah (56), the houseowner, was first killed by the attackers, who then killed Hansdah's wife Delho (50) and his elderly mother, Sonia.
The attackers before leaving set fire to Hansdah's hut, threw chili powder in his nephew Makhan's eyes and hung him feet up from a nearby tree.
Burnwal said the exact cause behind the incident has not yet been established but witchcraft was suspected as one of the reasons.
Police has launched a massive hunt to apprehend the culprits, he added.