The former boxer from Britain was arrested after turning himself in following the death on Sunday evening, after the pair spent an afternoon drinking in a pub on the Costa Blanca resort of Javea.
Terence Wilmot, 42, was pronounced dead at the scene after he cracked his head on a pavement outside the pub.
Robert Gray, 46, who is now in custody and will go before an investigating judge on Wednesday, admitted that he had punched Wilmot but insisted he had not intended to kill him.
"The pair were known to each other and had been drinking in a pub with a group of people on Sunday evening," a spokesman from the Spanish Civil Guard told The Local.
Witnesses claim that Wilmot had been verbally provoking Gray inside the pub and then followed him and his girlfriend into the street.
When Wilmot continued his drunken rant and then lunged at Gray, the ex-boxer delivered one punch, knocking him to the ground, an incident that was caught on CCTV cameras outside the pub.
Wilmot fell and hit the back of his head on the pavement where he died within an hour despite efforts of an ambulance crew.
The Civil Guard confirmed that Gray had handed himself in later in the evening.
Javea, or Xábia as it is known in Valenciano, is a popular seaside town in eastern Spain with a large community of expat residents.