The old man states that he knows the story of the Duke and Duchess from his grandmother. His account is based on the information given to him by her. Since the events took place 200 years ago, the first person narrator voices doubt. To his the old man replies that he is very old indeed and that “[...] she was a very old woman when I was born. When she died she was as black as a miraculous Virgin and her breath whistled like the wind in a keyhole.”[1] In the Duchess's time, she was a slip under Nencia - her aunt and the upper maid to Violante - and later went on to marry Antonio, the steward's son and carrier of letters/ gardener. She apparently saw everything the old man relates to the unnamed first person narrator with her own eyes; at a pivotal point in the story, however, the readers learns that the last conversation between the Duke and Duchess was not witnessed by her but came to her second-hand from "a pantry-lad who brought up the dishes and waited in the cabinet."[2]
The grandmother is also the one who discovered the changed face of the statue and heard moaning coming from it (by her account, from its lips)[3] - the indicators for the Duchess's horror and Ascanio's imprisonment in the crypt beneath the chapel.
Apparently, upon discovering the statue, the grandmother was so stricken that she "never smiled again, so she told me, till they put her first child in her arms."[4]
[1] Wharton 1901, p. 5
[2] Wharton 1901, p. 16/17
[3] Wharton 1901, p. 19
[4] Wharton 1901, p. 7