The incident happened around 1:45 a.m. on Sunday at the Melia Don Pepe Hotel in Marbella.
The British man, believed to be 50, was staying at the hotel when he somehow fell from a seventh-floor balcony.
Emergency services officials told local media the British man plummeted and landed on top of a second man, a 43-year-old Spanish local.
Both were pronounced dead at the scene.
A spokesman for the National Police in Malaga told Metro the incident is under investigation.
"I can confirm two men have died at a hotel in Marbella after one plunged from the seventh-floor and landed on top of another," the spokesperson said.
A spokesperson from the Foreign and Commonwealth Office confirmed the death of the British national to Sky News, adding it is supporting the man's family "following his death in Spain" and is in communication with local police.