This article gives an overview of the 26 year long ethnic conflict in Sri Lanka and examines physical reconstruction and economic development as measures of conflict prevention and post-conflict reconstruction. During the years of conflict, the Sri Lankan government performed some conflict prevention measures, but most of them caused counter effects, such as the attempt to provide “demilitarization”, which actually increased militarization on both sides, and “political power sharing” that was never honestly executed. Efforts in post-conflict physical reconstruction and economic development, especially after 2009, demonstrate their positive capacity as well as their conflict sensitivity. Although the Sri Lankan government initially had to be forced by international donors to include conflict sensitivity in its projects, more recently this has changed. The government now practices more conflict sensitivity in its planning and execution of physical reconstruction and economic development projects without external pressure.