The aim of this paper is to examine the pearl industry in ancient Sri Lanka. Historical chronicles and archaeological studies were used in collecting information. Further, records of foreign observers including Greek, Roman, Chinese and Muslim writers were used as supplement to the indigenous literature and archeological findings. As sources revealed, pearl is one of the valuable means of international trade in the ancient times, except the local uses for various purposes including jewelry making and donation. The country had become popular due to its valuable pearls. It is clear that pearls had played a big part in the local economy and in foreign relations and they had been used to achieve several objectives during the period focused on in this study.