Boys Will Be Boys..

Next time the boy comes to play, tell him the rules: You play nice, or you go home.
If he behaves, he stays. If he is nasty or rude, he goes home. It will only take once or twice before he gets the message.
We had that rule when we were kids and if anyone got crazy or rude, Mom sent them home.
The lessons were learned - early. You must treat people with respect or you will not be allowed to play.
LBC

If your son does not want to play with him you shouldnt make him, but he should let the other boy know "I dont feel like playing with you today". Kids are like that tho, they change their mind the next day. I wouldnt take it too serious. I remember how my boys were at that age too. If there were 5 or 6 5 yr olds in the yard someone always had to kick someone in the nuts before it was over, its a testosterone thing. They probably should be left to sort it out amongst themselves (monitored of course). That's pretty much what ultimately turns them into men. Some boys are sweet and will sit and play legos for hours where others like to be like little goats and wrestle and butt heads. That is just boys being boys...

Well, don't forget to think about this- whenever there are THREE of a group- two usually buddy up and one is invariably left out, or feels left out. This even happens with adults. That could be what is happening here. Is there any way you can oversee the next playtime? It's hard to make a judgement call without knowing exactly what is going down.
You might be able to guide the children into better waters by explaining this dynamic to your son in private and help him to be more compassionate. Help him to undersrtand that the little boy feels left out and is acting up because of it (if that is indeed what is happening). Perhaps you can have them all play on your lawn.
How does your son do when it is JUST him and the other troublemaker boy? If they do ok, maybe it is indeed the 'three's a crowd' issue.

Updated

Well, don't forget to think about this- whenever there are THREE of a group- two usually buddy up and one is invariably left out, or feels left out. This even happens with adults. That could be what is happening here. Is there any way you can oversee the next playtime? It's hard to make a judgement call without knowing exactly what is going down.
You might be able to guide the children into better waters by explaining this dynamic to your son in private and help him to be more compassionate. Help him to undersrtand that the little boy feels left out and is acting up because of it (if that is indeed what is happening). Perhaps you can have them all play on your lawn.
How does your son do when it is JUST him and the other troublemaker boy? If they do ok, maybe it is indeed the 'three's a crowd' issue.

Listen to your son. He is the one that has to play with this kid. Your son needs to be heard.

I would just be honest.... your son is saying himself.. he does not want to play with that boy.

Not all kids, will get along. Its human.

PPs are right, this will only get worse and more involved as they get older; one day they will be best friends, the next they will all hate each other. Look at it this way, at least you're getting the chance to address it and set the ground rules early on!

Limit play time to just two boys at a time - if the third shows up gently explain your son is already playing with someone and maybe they can play next time; of course be prepared for this to happen to your son as well if the other parents also start limiting it to 2. When the boys (either of them) come to play, before anything gets started, sit them down to go over the house rules quickly. Explain if there is excessive fighting the friend will have to go home. Also see if you can pinpoint what seems to make this boy argue. If it's a particular toy, or game, then just tell them they're not going to play that today.

We have a couple boys in the neighborhood like that; one whines about everything if he doesn't get his way, the other gets nasty if he feels he's being left out. We've learned to never have both of them over at the same time. I've called the whiny one on his behavior many times by calmly pointing out that he wasn't 'wronged' and if he doesn't like what the others have chosen he's free to go home.

You're getting a preview of what this kid's school years are going to be, in terms of his behavior problems. Mom and Dad need to see it too, because they're the ones who will have to come to terms with this when he starts having parent-teacher conferences. I'd try to arrange play time when one or both of his parents are around, so they can see the problem. They won't believe it at first; they'll think it's your son or the other boy who are the problem. You may not be able to stay friends with this couple. We had a similar situation with a couple we really liked, but their children were horrible liars. We ultimately distanced ourselves from the couple, so our kids (and we) wouldn't have to deal with their children.

Looking at another site, I read that 80% of women that responded to the question: have you ever disciplined someone else's child stated yes:

http://www.theskinnyscoop.com/question/q/982?utm_campaign...

You can check out more comments on the page...

So you could talk to the child about his behavior and explain that he has to play nicely. Maybe you could talk about the other child's parents and see what they think and maybe you all could get together and explain your son and the second child's feelings toward playing with the 3rd child..? Communication is always key :) Hope this helps!

Well, since you say he can't even play one on one with your child I am going to say that the child need to learn how to be respectful to his peers. It is a hard lesson but I would rather a child learn it at 5 when they are not likely to find the wrong crowd and get into major lifelong trouble than at 15 when he can really do damage.