An estimated 2% of the 1,585km coastline has fringing reefs, with larger reef areas offshore in the Gulf of Mannar to the northwest and also along the east coast. Corals grow to varying extents on old limestone, sandstone and rocky reefs, with the location of reefs well known, but poorly mapped. Reefs are important for fisheries, coastal tourism, and preventing coastal erosion.

There are fringing, patch and platform reefs around Sri Lanka including sandstone/limestone and rocky reef habitats, covering 680 km². The most extensive coral reefs are offshore in the Gulf of Mannar region. The northeast and southwest monsoons govern environmental conditions for reef development. The southwestern coast of Sri Lanka has many rocky headlands and most fringing coral reefs have developed on the leeward side of these headlands due to strong waves generated by the southwest monsoon; there are no barriers to the south of Sri Lanka to reduce the impact of oceanic waves on the coast. There is better fringing coral reef development along the eastern coast, both on the leeward side of headlands and on offshore rocks and islands. Reefs are heavily exploited for resources and management intervention is generally inadequate.

Berg et al. (1998) estimated the minimum economic value of coral reefs in Sri Lanka at USD 140,000-7,500,000 per km² over a 20-year period. Further, the same study pointed out the great net national economic losses of for example coral mining in potential tourist areas in Sri Lanka.