Paleolithic human settlements have been discovered at excavations in several cave sites in the Western Plains region and the South-western face of the Central Hills region. Anthropologists believe that some discovered burial rites and certain decorative artifacts exhibit similarities between the first inhabitants of the island and the early inhabitants of Southern India. Recent bioanthropological studies have however dismissed these links, and have placed the origin of the people to the northern parts of India.
One of the first written references to the island is found in the Indian epic Ramayana, which described the emperor Ravana as monarch of the powerful kingdom of Lanka, which was created by the divine sculptor Vishwakarma for Kubera, the treasurer of the Gods. English historian James Emerson Tennent also theorized Galle, a southern city in Sri Lanka, was the ancient seaport of Tarshish from which King Solomon is said to have drawn ivory, peacocks and other valuables. The main written accounts of the country's history are the Buddhist chronicles of Mahavansa and Dipavamsa.
The earliest-known inhabitants of the island now known as Sri Lanka were probably the ancestors of the Wanniyala-Aetto people, also known as Veddahs and numbering roughly 3,000. Linguistic analysis has found a correlation of the Sinhalese language with the languages of the Sindh and Gujarat, although most historians believe that the Sinhala community emerged well after the assimilation of various ethnic groups.
From the ancient period date some remarkable archaeological sites including the ruins of Sigiriya, the so-called "Fortress in the Sky", and huge public works. Among the latter are large "tanks" or reservoirs, important for conserving water in a climate that alternates rainy seasons with dry times, and elaborate aqueducts, some with a slope as finely calibrated as one inch to the mile. Ancient Sri Lanka was also the first in the world to have established a dedicated hospital in Mihintale in the 4th century BCE. Ancient Sri Lanka was also the world's leading exporter of cinnamon, which was exported to Egypt as early as 1400 BCE. Sri Lanka was also the first Asian nation to have a female ruler in Queen Anula (47–42 BC).
Since ancient times Sri Lanka was ruled by monarchs, most notably of the Sinha royal dynasty that lasted over 2,000 years. The island was also infrequently invaded by South Indian kingdoms and parts of the island were ruled intermittently by the Chola dynasty, the Pandya dynasty, the Chera dynasty and the Pallava dynasty. The island was also invaded by the kingdoms of Kalinga (modern Orissa) and those from the Malay Peninsula.
Buddhism arrived from India in the 3rd century BCE, brought by Bhikkhu Mahinda, who is believed to have been the son of Mauryan emperor Ashoka. Mahinda's mission won over the Sinhalese monarch Devanampiyatissa of Mihintale, who embraced the faith and propagated it throughout the Sinhalese population. The Buddhist kingdoms of Sri Lanka would maintain a large number of Buddhist schools and monasteries, and support the propagation of Buddhism into Southeast Asia.
Sri Lanka had always been an important port and trading post in the ancient world, and was increasingly frequented by merchant ships from the Middle East, Persia, Burma, Thailand, Malaysia, Indonesia and other parts of Southeast Asia. The islands were known to the first European explorers of South Asia and settled by many groups of Arab and Malay merchants.
A Portuguese colonial mission arrived on the island in 1505 headed by Lourenço de Almeida, the son of Francisco de Almeida. At that point the island consisted of three kingdoms, namely Kandy in the central hills, Kotte at the Western coast, and Yarlpanam (Anglicised Jaffna) in the north. The Dutch arrived in the 17th century. Although much of the island came under the domain of European powers, the interior, hilly region of the island remained independent, with its capital in Kandy.
The British East India Company established control of the island in 1796, declaring it a crown colony in 1802, although the island would not be officially connected with British India. The fall of the kingdom of Kandy in 1815 unified the island under British rule.
Following the war, popular pressure for independence intensified. The office of Prime Minister of Ceylon was created in advance of independence on 14 October 1947, Don Stephen Senanayake being the first prime minister. On February 4, 1948 the country won its independence as the Dominion of Ceylon. The island enjoyed good relations with the United Kingdom and had the British Royal Navy stationed at Trincomalee.
On July 21, 1960 Sirimavo Bandaranaike took office as prime minister, and became the world's first female prime minister and the first female head of government in post-colonial Asia. In 1972, during Sirimavo Bandaranaike's second term as prime minister, the country became a republic within the Commonwealth, and the name was changed to Sri Lanka.
In the 19th and 20th Centuries, Sri Lanka became a plantation economy, famous for its production and export of cinnamon, rubber and Ceylon tea, which remains a trademark national export. The development of modern ports under British rule raised the strategic importance of the island as a centre of trade. During World War II, the island hosted important military installations and Allied forces. However, the plantation economy aggravated poverty and economic inequality.
From 1948 to 1977 socialism strongly influenced the government's economic policies. Colonial plantations were dismantled, industries were nationalised and a welfare state established. While the standard of living and literacy improved significantly, the nation's economy suffered from inefficiency, slow growth and lack of foreign investment.
