The siblings allegedly got into an argument after being left by their parents at their home in Taylor, Michigan, on Saturday.

The seven-year-old went into a bathroom after the argument and was then stabbed multiple times with a knife, the Wayne County prosecutor's office said.

The teenager, whose name has not been released, called 911 and her sister later died in hospital.

The older girl has been charged as a juvenile with first-degree premeditated murder, felony murder and first-degree child abuse.

Prosecutor Kym Worthy said designating the teenager as an adult was considered but that is not the same as criminally trying the girl as an adult.

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The designation "gives the judge the option of sentencing the respondent as a juvenile, or as an adult or giving a blended juvenile sentence with an option of imposing an adult sentence if the juvenile is not rehabilitated," the prosecutor said.

"Our other option was to keep her in the juvenile system. We opted to do just that."

Ms Worthy added: "Given her young age, the state would have seven years to diagnose, treat, and rehabilitate her until her mandatory release at age 21.

"Hopefully, then she would not be a danger to others."

The teenager was held in custody following a preliminary hearing on Tuesday at a juvenile court.