The killing came at 3am in a camp for Burmese workers in Moo 1, Baan Tha Rua, near a large Chinese temple landmark in Thepkasattri Road, central Phuket.
Two camps were close to each other and a rivalry had developed between young workers at both camps, said officers from Thalang Police Station today.
A group from one camp threw stones to provoke the other, police said. The provocation led to hand-to-hand fighting with knives, construction equipment and other weapons.
Killed was Aung Koo Oo Ku, 28, with Myo Khaing, 33, seriously injured. He and the body of the fellow worker are in Thalang Hospital.
Both men were registered workers. Burmese were helping police to pursue those suspected of the killing today.
In Patong, on Phuket's holiday west coast, police staged a crackdown early in the evening on young people who had been seen out late riding along beach road.
About 50 were pulled over, searched for weapons and drugs, then made to undergo urine tests.
Police then called their parents and told them to control their children. The move is seen as a proactive attempt to improve tourism safety before the high season.