Derek Grant's son Jordan - a politics student - was held up at knifepoint by Patrick Bradley as he made his way home from work last August.
The 20 year-old and his dad later found Bradley after tracing the phone using a mobile app.
Grant demanded the handset from Bradley - who then blinded the father-of-four by stabbing him in the eye.
However, a badly-hurt Grant retaliated by knifing the 29 year-old and fatally injuring him.
It lead to the 38 year-old being charged and today at the High Court in Glasgow he admitted to the culpable homicide of Bradley.
A judge heard how Grant had only reacted after being subjected to "extreme violence" and that the incident was a "tragedy" for his "high achieving" family.
Grant was remanded in custody and will learn his fate next month.
The court heard how Jordan Grant had been returning to his home in Greenock late last August 30 when he was confronted by knife-wielding Bradley.
Bradley - who had a significant record for violence - ordered the frightened McDonalds worker to hand over his iPhone, which he did.
Jordan went home and told his dad who - using the "Find My iPhone" app - found the mobile was still close by.
Grant then left his home in the town's Wellington Street with Jordan and his two younger sons Lee (17) and 16 year-old Jamie.
They spotted Bradley - who was not known to them - and Grant ordered he hand back the stolen phone.
But, Bradley instead lashed out at Grant and horrifically knifed him in the left eye. His frantic son Jordan then screamed for help.
But, his dad then repeatedly struck out at Bradley with a knife he had taken from home having feared for his safety before leaving.
Bradley suffered a cardiac arrest and died following the incident.
Grant was arrested and he later said: "I wish to declare for the record that at the time of this incident, I was acting in self defence."
Grant had faced a murder allegation before prosecutors today accepted his guilty plea to the reduced charge of culpable homicide.
His three sons were also accused of murder, but their not guilty pleas were also accepted.
Advocate depute Douglas Fairley QC said it was agreed Grant had suffered a "significant" degree of provocation before the fatal assault.
Grant's lawyer today told the court that he only lashed out as a "reaction to the extreme violence" he faced.
Ian Duguid, defending, added what happened had been a "tragedy" and "catastrophic" for a family that were law-abiding.
The court heard Jordan Grant was a university politics student, another son had hopes of being a footballer while a third was doing well at school.
Mr Duguid went on: "It may become evident this is a family of high achievement."
The QC also said Grant had been forced to give up his job as a driver having lost the sight in his eye.
Lord Boyd remanded Grant in custody and deferred sentencing until September 1 at the High Court in Livingston.