The suspect said his victim had accused him of selling fake drugs.
Police in Ho Chi Minh City arrested a man on Tuesday after he gave himself up for allegedly killing an American tourist during a drug deal that went wrong.
The arrest comes two weeks after the news of the death of Stephen Marshall Pendeeton, 22, took expat forums in Vietnam by storm.
Trinh Quoc Hung, the 20-year-old suspect, said Pendeeton and a foreign friend came to find him on Bui Vien Street on the night of June 21. They said the drugs he had sold them earlier were fake and demanded a refund.
Hung said he tried to explain, in broken English, that he was not the one selling them the drugs.
As the argument heated up, he grabbed an iron bar off the ground and allegedly stabbed the American in the back. The victim's friend and some locals rushed him to hospital, but he died soon after.
Police said they are still clarifying the reason for the murder.
Bui Vien is part of the city’s popular backpacker district, with bars, spas and clubs staying open until late at night. It draws up to 2,000 foreign visitors every day.
Ho Chi Minh City is one of the top tourist destinations in Vietnam, and welcomed more than five million foreign arrivals last year. But safety issues remain a concern for visitors.
Meanwhile, Vietnamese men arrested for attacking American in Hanoi.
Videos of the road-rage fight were posted on YouTube and have gone viral over the past days.
Police in Hanoi have detained two Vietnamese men for assaulting an American man following a road rage incident. A criminal investigation is also underway.
Nguyen Duy Khanh, 26, and Doan Van Cuong, 29, were filmed assaulting David Maxwell, 27, after a traffic collision on Tran Khat Chan Street last Friday, Tien Phong (Vanguard) newspaper reported
Maxwell was riding a motorbike with his girlfriend when they collided with Khanh's car and his sandal slipped under the wheel, according to police.
While he was trying to retrieve the sandal, Maxwell knocked the car's wing mirror, prompting Khanh to get out and allegedly attack him. Khanh's friend Cuong arrived on a motorbike soon after and threatened the American with a brick.
The fight ended just moments before the police arrived.
While the two sides have asked to settle the case between themselves, police have decided to treat it as a criminal offense as the fight caused public disorder and involved a foreigner.