The stabbed Australian, aged, 23, faces arrest once he completes treatment in a Phuket City hospital for a wound to his ribs.
A student aged 15 is also being treated in a hospital for a broken bottle stab wound to the back.
A second 15-year-old boy has been released into the custody of his parents and is likely to face charges.
It's understood that the Australian and the boys, students at Phuket City Technical College, had provided entirely different accounts of what happened in the altercation.
According to the three boys, they were setting off firecrackers along beach road about 11pm opposite the Baanthai Beach Resort when the Australian man and a friend, stripped to the waist, walked by on their way back from Soi Bangla.
The boys said the Aussie man started an altercation and the boys walked away, but the Australian man broke a bottle and stabbed one of them in the back.
At that point, a second boy also broke a bottle and stabbed the Aussie in the ribs. The boys ran off.
Patrol police were quickly on the scene and the Australian's wounds were treated. Patrol police quickly apprehended the three boys.
Both the wounded boy and the Australian were taken to Patong Hospital then transferred to hospitals in Phuket City. Officers from Kathu Police Station are investigating.
Violent incidents in Patong are seldom reported and local police prefer to mediate disputes where tourists are involved.