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The victim has been indentified as Khokon Molla, 32.
One Shahab Uddin attacked him and another hawker, Babul Byapari, with a knife around 3:30pm Wednesday, said Sub-Inspector Bacchu Mia of Dhaka Medical College Hospital (DMCH) police outpost.
Quoting the victims' co-workers, he said Shahab was a hawker based at the capital's New Market.
Locals rushed the injured to DMCH where doctors declared Khokon dead around 4pm, said the SI.
Babul is being treated at the hospital.
Police said they were yet to find out the motive behind the killing.