Louisville officers found Grundy injured while they were responding to a residence on Thursday evening regarding a domestic altercation, police spokeswoman Alicia Smiley said.
He later died at University of Louisville Hospital.
A coroner's office report says he died from "multiple sharp force injuries to the body."
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An investigation into Grundy's death is underway and no one has been charged, Smiley said.
Indiana coach and NC State teammate Archie Miller paid tribute to Grundy on social media as did current Wolfpack coach Kevin Keatts.
In July, Grundy pleaded not guilty in connection with a fatal hit-and-run crash in Kentucky.
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Lee Turner, a Raleigh attorney who worked with Grundy, said his client "truly was not a mean person. He had a good heart."
Grundy played guard for the Wolfpack from 1998 to 2002 and was First-Team All ACC during his senior season, when he helped the Wolfpack end a 10-year NCAA tournament drought in his final season.
Grundy averaged in double figures for three seasons with the Wolfpack, improving his scoring average each year. As a senior, he averaged 17.8 points per game, sixth-best in the ACC.
He had a brief stint in the NBA, playing with the Atlanta Hawks before playing overseas in Europe and Asia.