"He was on the floor and she was kicking him on his body and his head.
"I said 'please sister, please don't hurt him'.
"She stopped when I lay on top of him."
He said he next saw his friend in the sick room and the inquiry heard the boy was in hospital for around 10 days before he died.
A BBC and Sunday Post investigation earlier this year found that at least 400 children from Smyllum Park are thought to be buried in an unmarked grave at the town's St Mary's Cemetery.
The orphanage was home to more than 10,000 children between opening in 1864 and closing in 1981.
Prosecutors have said there is no evidence that a crime has been committed at the orphanage in relation to reports of the mass grave.
The witness also told how he was sexually abused by a nun, and described abuse by a lay female member of staff.
He told how children who wet the bed were made to stand with the wet sheets round their neck in the morning, and were also hit for bedwetting.
The inquiry later heard from a woman who entered Smyllum Park in 1960 as a baby and left when she was seven or eight.
She told how children who wet the bed would be dragged out of bed and put in a cold bath.
"(You were) battered for wetting the bed and told you were immoral," she said.