69-year-old Rajapaksa - who was elected in 2005 and 2010 - called for early elections, a full two years before his tenure ends.
His proclamation to seek re-election was issued at 1:30 pm, an auspicious hour, presidential officials said.
"I am declaring a secret today. I have signed the proclamation calling for the election for re-election for the third time... That is democracy," Rajapaksa said on state television.
The election is likely to be held in early January.
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Rajapaksa became eligible to call an election yesterday after completing the mandatory four years in his second term.
Yesterday, the Sri Lanka Freedom Party (SLFP) -- the main constituent of the United People's Freedom Alliance (UPFA) -- unanimously decided to field Rajapaksa as ITS candidate at the next Presidential election.
The SLFP senior vice president and Minister Nimal Siripala de Silva proposed the name of Rajapaksa and it was seconded by Prime Minister D M Jayaratne.
Elections Commissioner Mahinda Deshapriya's office said the presidential proclamation has been received and the due nominations procedure would follow.
Under the constitution, the president may call elections four years into a term. The Supreme Court upheld this law earlier this month, paving the way for his announcement.
Rajapaksa's decision came amid signs that he and his party were politically vulnerable. In local elections in September, his United People's Freedom Alliance suffered its worst losses, losing roughly 20 per cent support among voters.
Yesterday, his ally, the National Heritage Party (JHU), announced that it was exiting the government. As the main party of Buddhist monks, its departure could damage his support in a country where Buddhists comprise nearly 70 per cent of its population of 21.8 million.
Rajapaksa narrowly won elections in 2005. Six years later, he and his party clinched an overwhelming victory, after his government's success in defeating the LTTE in 2009, ending more than a quarter century of civil war.