A community in southern Tasmania is paying tribute to a father-of-two who was allegedly stabbed at a Hobart service station after a verbal altercation which "quickly escalated".

Key points: Father of two Reid Ludwig is being remembered as 'a genuine, fun-loving man'

Father of two Reid Ludwig is being remembered as 'a genuine, fun-loving man' Mr Ludwig died in hospital after a stabbing incident at a Blackmans Bay service station

Mr Ludwig died in hospital after a stabbing incident at a Blackmans Bay service station A teenager has pleaded not guilty to murder

Reid Ludwig, 41, was returning a trailer to a service station in Blackmans Bay, south of Hobart, just before 3:00pm on Sunday when he was wounded, police say.

He later died in the Royal Hobart Hospital.

A 16-year-old who was arrested at the scene has pleaded not guilty to murder and has been remanded in custody.

Police said the victim was Reid Ludwig, a father of two. ( Facebook: Reid Ludwig )

Kingborough Mayor Dean Winter said in a statement on Facebook the whole community was "shocked and saddened by this tragedy".

"Kingborough has a low crime rate and we all are appalled that something like this has happened in our community," he said.

Mr Ludwig and his brother, Blair, attended the Hutchins School in Sandy Bay and their father, Jim, was a teacher there.

Hutchins Old Boys Association president Barrie Irons said Reid Ludwig was "a really genuine and fun-loving young man".

"He always looked out for his friends and frequently helped his mates see the lighter side of life. His sense of humour was special," Mr Irons said.

"It's a tragic end to a family man in the prime of life."

Detective Inspector Michael Smith said Mr Ludwig and the teenager did not know each other.

Another male teen at the scene has not been charged.

"Police will allege that a verbal altercation occurred between Mr Ludwig and one of the youths," Detective Inspector Smith said.

"This led to a very minor physical confrontation, which then quickly escalated and tragically culminated in Mr Ludwig being fatally stabbed."

Reid Ludwig was returning a trailer when the incident happened, the ABC understands. ( ABC News: Andy Cunningham )

Family 'distraught' at loss of 'devoted father'

Mr Ludwig's seven-year-old son, his partner and her daughter were in the car in a side street.

"[Mr Ludwig] was assisted initially by members of the public and staff at the Coles Express [service station]," Detective Inspector Smith said.

"He was rushed to the hospital but he tragically died from his injuries later that afternoon."

Police earlier expressed condolences to Mr Ludwig's family.

"They're quite distraught and grieving the loss," Detective Inspector Smith said.

Mr Ludwig's family have told the ABC he was a "loving partner and devoted father" with two children.