The new political developments in the peace process in Sri Lanka have drawn attention to the small Muslim community of the island, which constitutes 7 % of the overall population. This article tries to show how such a small minority was able to define and consolidate its own ethnic identity against the Singhalese and the Sri Lankan Tamils. This separate Muslim identity was largely determined by a small Colombo-based elite of rich traders and businessmen, who were able to secure social and political control over the Muslim community right up to the present time. Relying on a strategy of political accommodation with the two great traditional Singhalese parties they have managed to maintain their own ethnic identity since independence. But the growing ethnic civil war in the Northern and Eastern province is now threatening this delicate political alliance. A political solution between the Singhalese and the Sri Lankan Tamils would sacrifice the last Muslim strongholds in the eastem parts of the island. This threat has forced the Muslim elite to start a process of politicising its ethnicity and to become an independent political force.