Police had initially said the blast on Monday was caused by a parcel or letter bomb but later the Kuwaiti ambassador to Lebanon said the device had blown up accidentally.
"It was an accident," said Kuwaiti ambassador Suleiman al-Said who was at the scene of the explosion on the 10th floor of a building in the shopping district of Hamra in west Beirut.
"The explosion occurred when the victim was handling the grenade," a police officer said.
Aljazeera correspondent Bushra Abd al-Samad said the explosion had caused little damage to the building's structure and that the windows in the ninth and 10th floors had even remained intact.
News of the explosion caused jitters as it followed a string of bombings in Lebanese capital in the wake of the February murder of former prime minister Rafiq al-Hariri and 20 other people.
The dead man was named as Iyad al-Aleyli, who was in charge of security at the Kuwaiti office, which is affiliated to the Gulf state's embassy in the Lebanese capital.
Over the past few days, Kuwaiti newspapers have been reporting on the political ramifications of al-Hariri's murder, particularly for Lebanon's former power broker Syria.
Ties between Lebanon and the oil-rich Kuwait were strained in 2003 over policy towards Iraq shortly before the US-led invasion that ousted Saddam Hussein.
On Friday, one person was killed and about two dozen more wounded in a bombing in a Christian quarter of east Beirut.