How can i turn him down and keep our friendship?

How best can you tell someone you don't want to start a relationship with him and not hurt his feelings and continue living just as good friends like always?

Well people tell me my friend (who is a girl) likes me and I don't want to act upon it due to the fact that she is my good friend, and if we got together and split up, id have nobody to talk to and probalby go crazy.

That guy is stuck in your friend zone, and you gotta let him know that without leading him on in any way. Just be his friend afterwards, and hope it doesnt get weird.