President Maithripala Sirisena and his government decided to declare a state of emergency for 10 days following the violence, which prevailed in some parts of the country.
Muslims claimed that around 10 mosques, 75 shops and 32 houses belonging to the minority community were badly damaged in the attacks by the Sinhalese Buddhists, forcing police to fire tear gas shells and impose an overnight curfew to prevent clashes between the two communities.
The situation, however, remained tense in part of Kandy, home to famous tea plantations and Buddhist relics, after the burnt body of a Muslim man was recovered on Tuesday from the remains of a burnt building.
Here's what you must know
1) Sri Lanka's growing communal tension
Tension has been growing between the two communities in Sri Lanka over the past four years, with some hardline Buddhist groups accusing Muslims of forcing people to convert to Islam and vandalising Buddhist archaeological sites. However, the Indian Ocean island-nation has a long history of communal clashes.
2) When monks united to bolster Buddhist primacy
In Sri Lanka, monks have long been involved in efforts to bolster Buddhist primacy. In the 19th century, amid fears that European colonisers and Christian missionaries were diluting Sri Lankan identity, monks led a Buddhist revival. This was followed by a cultural movement for the dominance of the Sinhalese language over English.
The efforts produced a Buddhist nationalism that persisted after independence in 1948 (Buddhism itself is accorded primacy in the Sri Lankan Constitution).
3) Sri Lankan hardliners' special ire for Muslims
In the past decade, activism by Buddhist monks has grown more overtly political. And some of these hard-liners reserve a special ire for Muslims. Religious and ethnic violence can turn deadly in Sri Lanka, where Muslims account for 10 per cent of the population and Buddhists Sinhalese make up nearly 75 per cent.
5) 15 June 2014 - Aluthgama Riots
Almost four years have passed since Buddhist mobs unleashed violence in Aluthgama, Beruwala, Dharga Town, Welipenna and Mathugama in the Kalutara district of Sri Lanka. They attacked Muslim-owned businesses, buildings, and homes. Mobs shouting anti-Muslim slogans and hurling gas bombs and stones advanced on the Muslim part of the village of Welipitiya, where men were protecting a mosque. The riot killed four people and left 80 injured. It was followed by a protest march by a Buddhist group, Bodu Bala Sena. President Maithripala Siresena had vowed to investigate anti-Muslim crimes after assuming power in 2015, but no significant progress has been reported.
6) Bodu Bala Sena
Founded in 2012 by two monks, Kirama Wimalajothi and Galagoda Aththe Gnanasara, Bodu Bala Sena, or BBS, is based out of the Sambuddha Jayanthi Mandira, a Buddhist cultural centre they operate in the capital of Colombo. The organisation claims to fight for the preservation of Buddhism and the Sinhala ethnicity in Sri Lanka. They feel that their identity is being eroded by multiculturalism, liberalism, and foreign elements.
7) Recent developments
The riots in Kandy led to the creation of communal disharmony following which some places of worship, residences and businesses were damaged.
Several houses and business establishments in the district, belonging to minority Muslim community, were burnt on Monday while the body of a young man was found inside a burnt house on Tuesday.
A curfew was reimposed on Monday in two police divisions of Kandy district till Wednesday morning following the tense situation.
More than two dozen arrests have been made so far, following the violence against the minority Muslim community in Kandy district which claimed two lives.
Members of the Buddhist community held protests outside a police station in Kandy demanding the release of its people who were arrested in the riots.
8) Sri Lankan govt condemns Kandy riots
The Sri Lankan government on Tuesday strongly and unequivocally condemned the recent sporadic incidents of violence that had sparked off in Ampara and Digana near Kandy in Eastern Province in the country. It also condemned the hate and mischievous misinformation campaigns carried out by some people, especially via social media, targeting the Muslim community in particular and others as well, in order to create disharmony among communities and inciting violence. It also urged every Sri Lankan citizen to desist from falling prey to such hate and misinformation campaigns respectively.
9) US embassy calls for quick action against perpetrators, religious minorities and conclusion of emergency.
10) Sri Lankan stocks drop to near 3-week closing lo
Sri Lankan shares dropped to their lowest close in nearly three weeks on Tuesday amid investors’ concerns about communal violence.
"Market came down with investors worried over the government declaring state of emergency," said Atchuthan Srirangan, a senior research analyst at First Capital Holdings.”
Investors are waiting to see how foreign investors will react to this state of emergency."
The Colombo stock index ended 0.3 per cent weaker at 6,533.46, following a 0.28 per cent drop last week.
Turnover Rs 436.8 million ($2.82 million), less than half of this year's daily average of Rs 954.9 million.