European ambitions arrived with the Portuguese during the early 16th century. The newcomers sought to establish a trading settlement in the growing port city of Colombo on the southwest coast. By then, the Sinhalese kingdom of Kotte had completely collapsed into petty partitions among three separate rulers.

The Portuguese were more interested in controlling the island's commerce than in absorbing its territory. In the process, they began to intrude in the affairs of the coastal regions. By the year 1600, after converting some of the Sinhalese royalty to Catholicism and breaking a strong bid for dominance by the rulers of the rebel state of Sitawaka, the Portuguese had effectively controlled the southwest coastal region and managed to snuff out the last Tamil kingdom ever to rule Jaffna as an independent state.

It was the attempt to bring the Kandyan kingdom under control that proved more troublesome, and eventually led to the demise of Portugal's power in ceilao, as they knew the country. Senarath (1604-1635) reestablished the kingdom of kandy following a short-lived conquest by Sitawaka. He entered into a treaty with the Portuguese in 1617 but relations began to sour after Portuguese incursions into the Kandyan ports of Batticalos and Trincomalee. Senarath's son, Rajasinha 2, conducted a vigorous campaign against Portugal, forming an alliance with the Dutch.