The incident happened just before 10 p.m. at 10th and King streets.
According to police, the suspect, 25-year-old Calvin Hooker III, confronted a woman who was pushing her infant daughter in a stroller through the area.
He approached the 21-year-old woman about a stolen phone, and then allegedly chased her waving a knife.
The woman tried to enter an unoccupied bus and that's when the second victim, 27-year-old Thomas Cottingham, intervened in an attempt to stop the attack.
Police say Hooker then stabbed Cottingham several times in the upper body.
Responding paramedics administered CPR on him until he could be transported to Christiana Hospital for care.
He was pronounced dead some time later.
After the attack, witnesses led police to a suspect in the 800 block of North King Street.
Officers pursued the suspect on foot briefly before arresting him.
Hooker was charged with 1st degree murder, possession of a deadly weapon and aggravated menacing.
On Tuesday afternoon, Cottingham's high school friend Alicia Waters put up pictures of him around the bus stop at Rodney Square.
"He has helped me in my past. It's not hard to believe that he would do something like this," Waters said.
Cottingham was a fixture on the square with his skateboard and music.
Those who knew him can't believe the man they called "Cannibal" is now gone.
"Cannibal, he really was genuinely a good person," friend Jessica Hitchens said.
"I fell over and was crying. He was a troubled teen. He was turning his life around," Waters said.
People on the square who often saw Cottingham during their daily travels called him a hero for trying to help.
"As far as I am concerned he is a hero," Wilmington resident Annetta Logan said.
Mayor Dennis Williams issued the following statement on the fatal stabbing:
I give my condolences to both the family and loved ones of Thomas Cottingham, and pray they find solace and strength in knowing he was a hero, as he bravely risked his life to protect a fellow citizen.
I, like the entire City, am outraged by this senseless act of violence. Through the increased presence of uniformed police officers with the department's downtown deployment and Downtown Visions security, the City works diligently to ensure the safety of Wilmington's downtown community. However, we must work even harder to make certain that tragedies, such as this, never happen again.
As eyewitnesses cooperated with the officers who arrived at the scene, Wilmington Police were able to quickly locate and arrest the suspect. Maintaining this collaborative effort between the police and community is important as we look to crack down on violent crime throughout the City of Wilmington.