This paper tries to demonstrate how in Sri Lanka a religion, Buddhism, was transformed into an ethnic and religious nationalism. The construction of this specific "Sinhala-Buddhism" forms part of a colonially induced process of modernization and democratization. First a great Buddhist tradition, then a popular Buddhism embracing the masses of lay people and eventually a Sinhala-Buddhist nationalism have been created. This exclusivist ideology and policy with its allegedly egalitarian, homogenizing and people-oriented model of society replaces the former religious and elitist state model. The "people" and "the nation" have now attained a predominant status in the politics of the Sinhalese majority in Sri Lanka.