Tourism has been identified as one of key industries in promoting economic growth and development of Sri Lanka. The aim of this study is to investigate the role of international tourism in economic growth of Sri Lankan. The study uses a tri-variate model of real gross domestic product, international tourist arrivals and real effective exchange rate to investigate the longrun and short-run dynamics of the relationship between tourism and economic growth. The annual time series data were obtained for the period spanning from 1967 to 2011. The results of Johansen’s Cointegration procedure show the evidence of long run relationship between the variables. In particular, result confirms the tourism-led economic growth hypothesis; tourism has a positive impact of economic growth in the developing countries. However, Granger causality test reveals evidence of unidirectional causality running from tourist arrivals to economic growth but not vice versa. The finding validates the need of government involvement at promoting and increasing international tourism demand to attain sustainable growth and development in the industry.