Barry Jones died sometime after 10pm at the grandstand in Five Dock Park in inner-city Sydney on September 26, 1976.
The 41-year-old labourer had been drinking at a local pub earlier in the evening before engaging in a sexual act while at a park believed to be a local gay beat.
His body was found the following morning with 53 stab wounds and a 10cm laceration to his throat, a court was told on Tuesday.
Semen stains found on Mr Jones' underwear and trousers suggested the Sydney man had engaged in sexual activity shortly before his death.
Counsel Assisting William de Mars said that while evidence in relation to Mr Jones' sexuality is "ambiguous," it strongly suggested he was not sexually attracted to women.
A witness who saw two men at the pub on the evening Mr Jones was murdered gave a statement to police saying: "They knew Barry because they kept saying, 'that bastard he's a queer, he's a poof'."
"It seems more likely than not that the perpetrator of the crime was motivated by a belief or understanding that Mr Jones was gay," Mr de Mars told the court.
Another local man who was a member of a gay rights lobby group was also interviewed at the time.
Grant Taylor told police the Five Dock Park had been "a regular meeting place for homosexuals" and may have been used as a beat at the time of Mr Jones' death.
Mr Jones was not known to have any enemies and there was no obvious motive for the killing, Mr de Mars said.
The "gratuitous infliction of wounds well in excess of those necessary to bring about death" was indicative of a frenzied attack and potentially consistent with a hate-based motivation, he added.
Persons of interest were assessed at the time including a young mentally ill man who lived nearby, as well as two young men seen at the pub referring to Mr Jones using homophobic slurs.
The inquiry will also examine the murder of Peter Baumann, a German national who went missing from his home in Waverley in suspicious circumstances.
The NSW special inquiry into LGBTIQ hate crimes has been examining the unsolved deaths of 88 gay men between 1970 and 2010.
The 11th block of hearings in the long-running inquiry concludes this week.
The commissioner, Supreme Court Justice John Sackar, will deliver a final report in August.
1800 RESPECT (1800 737 732)
National Sexual Abuse and Redress Support Service 1800 211 028
Lifeline 13 11 14
Fullstop Australia 1800 385 578
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