Zabair Hussain, 41, was discovered with multiple injuries to his head and body in Staniforth Road, Darnall, Sheffield, at about 23:20 GMT. He later died at the scene.
The 28-year-old arrested man has been taken into police custody.
Officers believe a number of men were involved in an assault and have appealed for witnesses to come forward.
Det Ch Insp Steve Handley, from South Yorkshire Police, said: "We are still in the very early stages of the investigation and we're carrying out numerous enquiries to get to the bottom of what happened - from reviewing CCTV footage to speaking to potential witnesses.
"While I understand that incidents like this are worrying for those living locally, we have increased patrols by neighbourhood officers to reassure residents."
A man has been arrested on suspicion of murder after another man's body was found in a street on New Year's Eve.