After posting 252 in 49.2 overs, the Lankans bowled out the opposition for 155 in the 44th over to win the tie in a comprehensive fashion at the Zayed Cricket stadium.
India was never in the hunt as they lost their top three batsmen in the first 10 overs.
Shikhar Dhawan, Hemang Badani and Sadgopan Ramesh all perished in quick succession making things a lot more difficult for the other batsmen.
With the top three returning to the pavilion, it was never going to be easy for an inexperienced middle-order that caved in under pressure against some accurate bowling and smart fielding by the Lankans.
Even the presence of four members of the national team in the dressing room - Virender Sehwag, Zaheer Khan, Yuvraj Singh and Ashish Nehra - could not lift up the spirits of the Indians.
Wicketkeeper-batsman Manvinder Bisla (30) and all-rounder JP Yadav (27) offered some fight but never got any support from their fellow batsmen.
A 65-run partnership between Sunil Joshi (27) and Harvinder Singh (26) for the ninth wicket delayed the inevitable before Sri Lanka wrapped up the match in the 44th over.