Paul Kelly, 49, then set his house on fire before breaking into another home and setting it alight.
The family who lived there said it was like a scene from a horror movie.
Earlier, Kelly’s girlfriend had gone to his home and was shocked to find his dog decapitated.
Duncan Ritchie, prosecuting, told Leeds Crown Court: “He told her the dog had been possessed.”
Kelly burned the animal’s head in a bin and dumped the torso in a wood.
He then set fire to his gas meter cupboard and left the terrace house in Beeston, Leeds.
Next day he broke at random into a detached house three miles away and started a blaze.
Kelly, who admitted arson, was jailed for seven and a half years.
He was already serving 18 weeks for causing unnecessary suffering to his dog.