Fidel Anderson, 21, was knifed in the stomach behind Club M, with a second man, aged 23, left in a serious condition after the horror attack.
A 23-year-old man arrested in City Arcade a short time after the attacks on suspicion of grievous bodily harm, remains in police custody tonight.
Singer Neville, of the 1980s Ghost Town band, confirmed the tragic news on Facebook.
"My beautiful daughter Melanie & wife Christine Sugary, all the family and myself are still shocked by this tragedy.
"But would like to thank you all for the kindness & messages we have received. Thank you."
Another man, aged 23, was also found with stab injuries a short distance away in Queen Victoria Road.
He remains in a serious but stable condition in hospital following surgery this afternoon.
Neville performed on The Specials' ska hits, including A Message to You Rudy and Free Nelson Mandela, and now tours with his own band.
He confirmed he will still play at the Godiva Festival this afternoon just a day after his grandson was killed.
His family said the show will go ahead in tribute to 21-year-old Fidel, with a performance by the Neville Staple Band on the main stage at 4.40pm highlighting knife and gun crime.
Mr Staple's wife, Christine, told the BBC: "Our daughter Melanie said she wants us to still do it.
"Neville wants to dedicate the performance to Fidel and we want to do a little bit of highlighting while we are there and use our profile for something good by highlighting just what is going on at the moment with the young people and the things that are happening with knives, and in some cases guns, on our streets.
"Fidel was just so handsome, so sweet, such a charmer, anyone who met him would always say 'he's just so wonderful, what a lovely boy'.
"But he had become a man, he'd reached 21, and he was just lovely, just amazing and I just can't believe he is gone still, I really can't.
"I think we are all still in shock really, we're still quite numb. We did a lot of crying yesterday and a lot of stressing."
Detective Inspector Harry Harrison, from the homicide unit, said: “Sadly another young man has lost his life in a knife attack.
“Our thoughts are with his family at this dreadful time.
"Our family liaison officers are supporting them as we continue our investigations into what happened.
“We are aware that numerous people who were at the club at the time could have witnessed what happened and I would urge them to contact us with any information no matter how insignificant it may seem.”
Officers are continuing to speak to witnesses and examine CCTV.
Anyone with information is urged to contact West Midlands Police either via Live Chat at west-midlands.police.uk between 8am and 9pm, or by calling 101 anytime or contacting Crimestoppers anonymously on 0800 555 111.
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