An Australian woman has been charged with murder after allegedly setting her husband's genitals on fire because she thought he was having an affair.

After the fire spread through the family home, Rajini Narayan, 44, told neighbours she that she was a jealous wife and had only wanted to burn her husband's genitals so it belongs to me and no one else, prosecutors said.

Narayan was quoted as saying, It's just his penis I wanted to burn, I didn't mean this to happen.

Prosecutors said Narayan's engineer husband Satish was asleep in their double-storey Adelaide home when his wife doused his genitals with an alcohol-based solvent and set them on fire on December 8 last year.

The blaze spread when he jumped out of bed and knocked over the bottle of alcohol, causing about A$1m damage to the house and a neighboring property, the court heard.

Narayan, 47, died in hospital last week.

Narayan was remanded in custody for psychological assessment and will reappear in court Friday.