Police had been placed on alert in Kandy, home to famous tea plantations and Buddhist relics, to ensure that the “situation does not spiral into inter-communal conflagration,” the government said.
“The government appeals to all parties and especially the general public to act with responsibility and remain calm,” it said in a statement.
Police said there had been riots and arson attacks since the weekend in Kandy.
“The curfew was imposed to control the situation in the area,” said police spokesman Ruwan Gunasekera.
Local officials said over two dozen suspects had been detained by police in connection with the spate of arson attacks, while senior officers had also launched an investigation into the conduct of police.
The violence has worsened since a man from the island’s mainly Buddhist Sinhalese majority died at the weekend from injuries sustained during a riot last week.
Kandy is just the latest region to be plagued by religious and ethnic conflict in Sri Lanka, a nation of 21mn people.
Mobs set fire to Muslim-owned businesses and attacked a mosque in the east of the country last week after a Muslim chef was accused of adding contraceptives to food sold to Sinhalese.
The government dismissed the allegation as baseless and ordered the arrest of those fomenting unrest in the area.
Prime Minister Ranil Wickremesinghe also ordered an investigation into alleged police inaction in handling the clash.
Last November riots in the south of the island left one man dead and homes and vehicles damaged.
Religious and ethnic violence can turn deadly in Sri Lanka, where Muslims account for 10% of the population and Sinhalese make up nearly 75%.
In June 2014 riots between Buddhists and Muslims left four dead and many injured.
That violence was instigated by a Buddhist extremist group whose leaders are on trial accused of spurring religious conflict.
