A man is dead and another is on the run after an alleged stabbing in the city's south.

Police believe two men were involved in a fight at the corner of Essex Street and Malvern Road, in South Yarra, about 11pm on Friday.

During the altercation on man, believed to be aged in his 40s, was stabbed to the upper body.

He was rushed to hospital but died a short time later.

Senior Constable Adam West said the other man ran from the scene.

The incident occurred near a block of housing commission flats.

A major crime scene has been set up on Saturday morning around the building and surrounding roads are closed between Surrey and Chapel Streets.

Police and forensic officers can be seen collecting items from the middle of Malvern Road and bagging them for evidence.

One woman called incident "sad" and said "no one deserves" to die in such a way.

Police are now appealing for anyone who witnessed the incident or has dashcam footage to contact Crime Stoppers on 1800 333 000 or submit a confidential crime report at 1800 333 000 or submit a confidential crime report at www.crimestoppersvic.com.au

More to come.

alanah.frost@news.com.au

Originally published as Man dies in South Yarra stabbing