Sewage from thriving hotels and guesthouses pours, often untreated, out into the water polluting the sea and shore.
Even the country's own tourism minister says he has stopped swimming in the seas close to capital Colombo because of the dirty water.
More than two million visitors now head to the tiny Indian Ocean island every year, more than four times the number that came in 2009.
Guesthouses have sprung up to cater for soaring numbers of visitors -- but often with little thought for how to deal with the waste they produce.
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Many simply discharge raw sewage straight into the sea, exposing bathers to potential health issues.
The problem is most acute just south of Colombo at Mount Lavinia, an upscale neighbourhood and resort known for its "Golden Mile" of beach.
Environmental engineering expert Mahesh Jayaweera said the bays in Mount Lavinia were now so polluted that people should not bathe in them.
Levels of faecal contamination at Mount Lavinia are 60 times higher than maximum safe limits, said Jayaweera, of Sri Lanka's University of Moratuwa.
Many visitors are unaware of the dangers, but locals are more aware of potential issues.
"We just come here to play," said local resident Harsha Swadesh, 26, enjoying a game of volleyball with friends. "The sea is rough and it is not very clean."
But researchers say it is among the most polluted, with many guesthouses dumping their raw sewage into the ocean, especially at night.