The diplomatic relations between Sri Lanka and Chile were established in 1962. Chile established a Consulate in 1928 in Colonial Ceylon and the world renowned Chilean Poet Pablo Neruda once served as the Chilean Consul in Colombo but the Consulate was subsequently closed. The Embassy of the Chile in New Delhi is concurrently accredited to Sri Lanka and the Embassy of Sri Lanka in Brasilia is concurrently accredited to Chile.

As members in the Non-Aligned Movement (NAM), Sri Lanka and Chile share some common position and the two countries have cooperated at multilateral fora on common matters.

Currently, the Government of Sri Lanka is in the process of seeking Observer Status of the Pacific Alliance (PA) which is a four-country trade bloc comprising Chile, Colombia, Mexico and Peru in order to strengthen Sri Lanka´s trade relations with the region.