Duwayne Brooks gave an emotional account of how the confused and fatally wounded Mr Lawrence asked him what had happened.
Sobs could be heard coming from the public gallery as Mr Brooks broke down during his testimony, but the Lawrence family remained composed.
The 37-year-old, who gave evidence at the Old Bailey despite his father dying the previous night, described the unprovoked attack by a gang of white youths in Eltham, south east London, in April 1993.
After watching his friend forced to the ground in a flurry of violence, he was "relieved" to see him get up, the jury heard.
Mr Brooks said: "For a second I was relieved that nothing had happened and we ran up the road and we were running, and he kept asking me to tell him what was wrong because he can't run properly. Blood was streaming out around his neck and through his jacket."
Mr Brooks, who had known Stephen since the age of 11, sobbed as he looked at a picture of the scene and described his best friend's dying word to him. He told the court: "He said one more time 'Duwayne' and his voice was funny."
Mr Brooks told the court violence broke out after the attackers had hurled racist abuse at him and his friend.
Asked to describe the group, he said: "At the time all I could say was they were all white, they were about the same age and they were all wearing jeans."
Gary Dobson, 36, and David Norris, 35, both of south London, deny Mr Lawrence's murder.
Pathologist Dr Richard Shepherd said Mr Lawrence bled to death after arteries were severed by stab wounds to the right and left shoulder. The trial was adjourned until Monday.