In a match which again appears destined to finish well inside five days, weather permitting, Sri Lanka were 225 for five in their second innings at stumps on the second day on Saturday.
The free-flowing scoring on a benign batting pitch was in stark contrast to the rather limp first innings efforts from both sides where New Zealand were all out for 130 in reply to Sri Lanka's 268.
Sri Lanka, seeking to square the series after New Zealand won the first Test by five wickets, were at one stage four for 100 in their second innings with the top order dismissals including danger man Kumar Sangakkara.
After unbeaten centuries in his previous two innings, Sangakkara lasted only 14 balls before cutting Shane Bond to James Franklin at deep point to be out for eight and finish the Test series with an impressive average of 134.
It was Chamara Silva who primarily kept the scoreboard ticking over with a 68-run stand for the fifth wicket with Mahela Jayawardene, and an unbeaten 57-run partnership with Prasanna Jaywardene.
At the close, Silva was unbeaten on 79, his second half century of the match after failing to score in the first Test, while Jayawardene was not out 22.
Lasith "Slinga" Malinga and Muttiah Muralitharan had earlier bowled Sri Lanka to a 138-run first innings lead.
The New Zealand batsmen had no answer to the hostile pace and slinging action of Malinga at one end, and could not read Muralitharan's spin at the other, as they crumbled to be all out before lunch on the second day for 130.
Of the New Zealand batsmen only Brendon McCullum put up any solid resistance. He was dropped on the first ball of the day without scoring and went on to post 43 before he was bowled by Muralitharan to end the innings.
But his knock was not without cost as a Malinga blow to the knuckles forced him to go to hospital for treatment.
Mathew Sinclair replaced McCullum behind the stumps when Sri Lanka came out to bat again.
New Zealand has also lost all-rounder Jacob Oram to a hamstring injury, depleting their bowling options.
Oram was one of seven New Zealand batsmen who failed to make double figures, including senior players Stephen Fleming and Daniel Vettori who failed to get off the mark.
With a mix of bouncers and yorkers, Malinga terrorised the New Zealand order and was rewarded with career-best figures of five for 68, while Muralitharan chimed in with four for 31 to complete the demolition.
In one magical three-over spell, Muralitharan had Oram (1), James Franklin (1) and Shane Bond (8) all trapped leg before wicket.
New Zealand lead the series 1-0.
Sri Lanka 268 and 225 for 5 (Chamara Silva 79 n o, Mahela Jayawardene 31, Jayasuriya 31, Prasanna Jayawardene 22 n o; Vettori 3 for 101, Martin 1 for 41, Bond 1 for 49) Vs New Zealand 130 all out ( Brendon McCullum 43, Jamie How 29; Malinga 5 for 68, Muralitharan 4 for 31)