George Low, a 22-year-old from Kent, England was killed early Sunday and another 22-year-old Briton was seriously wounded in a pre-dawn attack by two knife-wielding men along a busy Ayia Napa street.
Police said the stabbings happened after the Britons got into a shoving match with one of their attackers.
The Cyprus News Agency reported that a 48-year-old woman told the Famagusta District Court that her 22-year-old Turkish Cypriot boyfriend disclosed to her that he and a 42-year-old friend had perpetrated the attack. Police said they are treating the case as premediated murder and attempted murder.
The woman hasn't been charged yet, but the court ordered her into police custody for eight days to give investigators time to prepare a case against her as an accessory after the fact.
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Police spokesman Andreas Angelides told The Associated Press authorities are still searching for the two alleged attackers, who have been identified as Mehmet Akpinar, 22, and Sali Ahmet, 42.
Cyprus has been divided along ethnic lines since a 1974 Turkish invasion in the wake of a coup aiming at union with Greece. Cypriot authorities have no control over the north and cannot make arrests there.