The 21-year-old was arrested on suspicion of murder yesterday afternoon following the death of 31-year-old Sami Khaled Saif Al-Sarsoori, who was stabbed on the Wensley estate, Firth Park, earlier that morning.
Mr Al-Sarsoori was found injured in Wensley Street just after midnight and was rushed to hospital but could not be saved.
The crime scene was cordoned off yesterday while officers carried out door to door enquiries and forensic experts examined the area.
Extra police patrols have been ordered in the wake of the knife attack.
Detective Chief Inspector Steve Whittaker, who is leading the murder investigation, has said: “Extensive enquires are currently ongoing to establish the exact circumstances of the incident and I would urge anyone with any information to please report it to us.
“I understand incidents of this nature cause alarm and fear and I would like to offer my reassurance that officers will be conducting extra patrols in the area.
“If you witnessed the incident, or have any have any information that may be able to assist with our investigation, please report it."
Anyone with information should call South Yorkshire Police on quoting incident number 3 of September 10.
Crimestoppers can also be contacted anonymously on 0800 555111.