Pearson was initially bowled over on the touchline by McArthur after a tackle by Marc Albrighton, resulting in what was initially a friendly exchange between the Foxes boss and Palace midfielder.
Pearson even playfully grabbed McArthur around the throat before helping him to his feet, only to then prevent him from returning to the pitch by grabbing hold of his shirt.
Asked why he refused to let go of McArthur, who almost joined City last summer only for the club's two bids of £5million and £7million to be rejected by Wigan, Pearson replied: "Because he said something to me."
Asked to elaborate, Pearson added: "I don't have to reveal anything do I? I'm more than capable of looking after myself.
"Listen, I've a lot of respect for the lad, he's a good player. You know what happened in the summer in terms of him coming here.
"I'm as disappointed as he was with how things panned out, but it was nothing to do with either myself or the player.
"That's the other football club that were involved who take absolute responsibility for anything that wasn't quite right.
"There was a certain manager (Uwe Rosler) who opened his trap when he should have kept his mouth shut.
"But there's no problem with the player. He's a good player and a likeable lad."