1901 marked the introduction of film to Sri Lanka (then called Ceylon) when a film was shown for the first time in the country at a private screening for the British governor West Ridgeway and prisoners of the Second Boer War. It was a short film that documented the British victory in the Boer War, the burial of Queen Victoria and the coronation of Edward VII. More English screenings followed and attracted British settlers and Anglicized Sinhalese.
Cinema in Sri Lanka became a public affair due to the efforts of Warwick Major, an Englishman who developed "bioscope" showings. These were films screened out in open areas and makeshift tents. The first permanent theaters were built by Madan Theaters in 1903. The company showed Indian films and achieved success, prompting the development of theaters by the rival Olympia.
In 1925 Rajakeeya Wickremaya (Royal Adventure) became the first film to be made in Sri Lanka. Dr. N.M. Perera played the lead in the film which was shown in India and Singapore. However this film reels got burnt before they were shown in Sri Lanka. In 1933 the film Paliganeema was screened in Colombo.
During the 1920s and 1930s films with American stars like Charlie Chaplin, Greta Garbo, John Barrymore, Rudolph Valentino, and Douglas Fairbanks, Jr. were popular in Sri Lanka. The Shiek and The Thief of Bagdad were especially popular. in 1932, the first sound film to be screened was shown at the Regal Cinema, titled "The Dream." By the 1930s Indian films started to surpass English films in popularity. Bilwa Mangal set an early record for Sri Lankan box office earning.
The beginnings of cinemas spread was seen when the Indian Madan circuit established Elphinstone cinema in Colombo as a part of his extensive cinema chain in Asia. Empire cinema, which became the longest functioning cinema in Sri Lanka was established in 1915 and continued to function till 2003 when it was demolished to make way for a commercial building in Colombo
South Indian producer S. M. Nayagam played an important role in the development of the first Sri Lankan film. In 1945, Nayagam founded a company named Chitrakala Movietone and constructed a studio in Madurai, India for the purpose of making a Sinhala film. After considering several options, he decided to build the film around the historical love story of Saliya and Asokamala and held a contest to find a suitable screenplay; the winner was budding artist Shanthi Kumar. Due to disagreements however this project fell through and Nayagam broke a deal with dramatist B. A. W. Jayamanne to film his popular play Kadawunu Poronduwa.