Journalist Ian Bailey was upset and crying when he put his arms around a man and said: "I did it, I did it", a High Court jury has been told.
Richie Shelley said he asked what did he do, and Mr Bailey replied: "I went too far."
Mr Shelley said this happened sometime after 2am on January 1, 1999, at Mr Bailey's home at the Prairie, Schull in Cork, after the journalist had been looking at newspaper cuttings about the murder of Sophie Toscan du Plantier.
Asked what he believed Mr Bailey was talking about, he said: "I think the murder was heavy on his mind because it was the main subject of the night."
Mr Bailey was "obsessed" with the murder and had earlier produced a shoebox of cuttings about it, he said. His understanding of Mr Bailey's remarks was he was admitting to murder.
Mr Shelley, then aged 24, said he was shocked by what Mr Bailey said and would remember it "until I die".
Mr Shelley was giving evidence in the continuing action by Mr Bailey against the Garda Commissioner and State over the conduct of the investigation into the murder of French woman, Sophie Toscan du Plantier whose body was found in Schull on December 23, 1996.
The defendants deny all of Mr Bailey's claims, including of wrongful arrest and conspiracy.
Mr Shelley did not accept a suggestion by Ronan Munro BL, for Mr Bailey, that what his client was actually upset about was people were saying he had done the murder.
Asked about Ms Thomas' evidence Mr Shelley was so drunk he could not have accurately remembered events that night, he said he did not accept that. He had consumed four or five drinks prior to coming to the house and drank two cans of lager when there.
He described as "absolute lies" evidence by shopkeeper Marie Farrell he had told her he could not remember what Mr Bailey had said.
He believed his girlfriend Rosie, now his wife, had heard Mr Bailey's remarks, made to him in the kitchen of the house.
She was nervous and they left Mr Bailey's home by foot shortly afterwards, he said.
He was contacted by RTÉ's 'Prime Time' in 2014, who said Marie Farrell had told them she had met Mr Shelley on the street some years previously and he had said Bailey did not do it and the guards "twist everything".
Mr Shelley said he had not said that, and he said that his conversation with Ms Farrell was about her saying she had been offered money from newspapers and was going to take it to buy doors and windows for a house she was building.
The case resumes on Tuesday.