An x-ray on the injured finger revealed a fracture, which has put an end to the left handed opener's hopes of featuring in the tournament any further.
Karunaratne would unfortunately be returning home.
He is to be replaced by Seekkuge Prasanna, who is already in Australia as cover for the injured Rangana Herath.
The left-arm spinner Herath, if unable to continue, would be replaced by the opening batsman Kusal Janith Perera, Sri Lanka Cricket announced today.
Karunaratne, who fared well in the Test series against New Zealand leading to the World Cup, was dropped down the order leaving the regular opener Tillakaratne Dilshan to open with Lahiru Thirimanne.