The British man, 40, was reportedly held on Saturday after the German national was attacked in a restaurant in the resort of Sotogrande.
The victim, 43, had been arrested days before for allegedly possessing indecent images of children, the Civil Guard told the Press Association.
The Foreign Office is investigating.
"We stand ready to provide consular assistance if requested," a spokeswoman said.
Police said they had found the victim with "very serious" wounds. He died later in hospital in nearby La Linea de la Concepcion.
A spokeswoman for Spain's Civil Guard told the Press Association: "The discussion apparently began because of alleged recordings that the victim was making of the aggressor's daughter.
"When he saw what was happening, he took the tablet off him, saw the recordings, threw the device to the ground and attacked him."
Officers said that the suspect had been remanded in custody after appearing before a magistrate.
A post-mortem examination has been carried out and authorities are awaiting results to determine how the victim died.
A Briton has been remanded in custody in Spain on suspicion of killing a man he had caught filming his daughter on a tablet, reports say.