Firefighters were called around 7:30 p.m. to the 5400 of Cardigan Court near Yadkin Road, after the man's family saw smoke coming from the shed.
The man, later identified as 54-year-old William Pittman, had been living in the shed behind his family's home for about 8 months because he refused to come inside the home due to his schizophrenia, according to family members.
They told ABC11 Monday morning that Pittman's two brothers threw buckets of water on the flames after it was believed Pittman was smoking and caught his mattress on fire.
A neighbor who went to high school with the brothers said he was jogging past the home when he noticed the frantic scene and started helping.
"To see it again like this is just terrible, terrible event," Berry Ward said. "You never want to see this happen to anybody and the way that that ended ... horrible situation."
Pittman's family said it is the third death in the family in nine days.
Meanwhile, authorities have said they do not suspect any foul play in connection with the incident.