The man has been identified as Amajato Atomo, a native of Nagasaki city in Japan.
"The body was in a state of partial hanging and the exact reason of death will be ascertained only after the post mortem examination," said Shalini, circle officer, Bhelupur.
The Japanese embassy has been informed about the incident.
The police recovered $10, a calculator, two cigarettes, few medicines and a planning calendar from a bag lying beside the body.
Atomo had reached New Delhi on March 11 and arrived in Varanasi the next day by Marudhar Express.
According to reports, locals had spotted Atomo at Assi Ghat on Thursday evening.
Police is still clueless about reason behind the murder and area where Atomo was living in Varanasi.