Four people were taken to hospital with stab wounds following the clash between the two groups of people from Middle Eastern origin.
One man later died and another remains critical after the fight in Folkestone, Kent, last night.
Crime scene: One man was fatally stabbed during the street fight outside a flat in Folkestone
Kent Police have detained one man in connection with the incident and said officers are expected to make further arrests.
A police spokeswoman said: 'We are continuing to investigate a large disturbance which began at around 8.30pm last night.
'It is believed that a group of men gathered outside a flat in Marine Terrace where a party was being held.
'A fight took place between the group outside and the people from the party. Four people sustained stab wounds and were taken to hospital. Several other people also sustained a range of injuries.'
Police are searching the area as part of their investigation into the brawl
Marine Terrace was closed off this morning while police investigators search the crime scene for clues.
Chief Supt Chris Hogben said: 'We are investigating this serious incident which appears to be the result of a dispute between two groups of Middle Eastern people.
'We also have specialist officers working within the community to reduce these tensions.'
Detectives have already spoken to a number of witnesses, but appealed for anyone else with information to come forward.
John Forbes, aged 56, who lives in flats overlooking the area where the brawl took place, said: 'There are a lot of Middle Eastern people living round here.
'They congregate round by the flats where this happened, drinking strong alcohol.
'We came home late last night and saw the area blocked off, but I didn't see or hear anything.'
Resident Tina Alder said: 'I was out shopping in Asda when it all happened but when we came back we saw a couple of lads lying in the road.
'My partner took out some towels to help them but by that time the emergency services had arrived.'