The 41-year-old man "was very drunk", according to police. At the police station, the man registered a 0.276 percent blood alcohol level.
The American national reportedly suffered only minor injuries after he was beaten by an incensed local. His assailant ran away after the attack, and is wanted by police for causing bodily harm to his victim.
It was revealed that he was also being investigated by authorities for the use of insignia of unconstitutional organizations, which includes Nazi symbols.
Dresden police would not give the Americans name or main residence for security reasons.
The incident marked the second time this month that tourists got themselves into legal trouble for giving the Nazi salute in Germany.
The American citizen - whose identity is now being withheld - is being investigated for violating German law that strictly forbids the use of Nazi symbols.
On 5 August, two Chinese tourists were caught taking photos of themselves making the gesture in front of Berlin's Reichstag building. A conviction can carry a prison sentence of up to three years, although courts often impose fines instead.