The Supreme Sat I was launched at 1543 hours local time from Xichang space centre in China's Sichuan province
The launch was done by SupremeSAT, a private company in collaboration with China's state-owned China Great Wall Industry Corporation, Chinese state-run Xinhua news agency reported.
Sri Lanka would be second South Asian country after Pakistan, whose satellites has been launched by China.
The USD 320 million satellite would start functioning from January. Sri Lanka has become the 45th country in the world to launch a communications satellite.
Rohitha Rajapaksa, the youngest son of the Sri Lankan President played a key role in the launch which is a Sri Lanka-China joint venture.
SupremeSAT said that the satellite will be capable of providing communications services, including broadband Internet, telecom and broadcasting services to the Middle East, South and Central Asia and Australia.
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"This is a proud moment for us as citizens of Sri Lanka," Vijith Peiris, group chief executive officer of SupremeSAT, said in a statement.
The Sri Lankan Board of Investment entered into an agreement with SupremeSAT earlier this year to launch the communications satellite for Sri Lanka.
The satellite will be positioned above Sri Lanka in the geo- stationary orbit approximately 36,000 km above the surface of the earth.
China has been strengthening its relations with Sri Lanka providing a lot of aid and infrastructure support including developing ports and road networks much to the disquiet of New Delhi as Beijing looks to get a firm foothold in Indian Ocean, regarded as India's backyard.