Tendulkar, who started the series in 13th position, finished in 23rd place after scoring 95 runs at 15.83.
He drops six places after scores of six and 14 in the third and final Test, which Sri Lanka won by eight wickets to clinch the series 2-1.
It is his lowest ranking since late 1992 after spending over 15 years in the top 20 apart from a very brief spell at the end of 2006.
Tendulkar, who is just 76 runs short of becoming the leading run-getter in Test cricket history, last occupied the top batting position six years ago after the 2002 Headingley Test in England.
Tendulkar"s drop is the only bad news for India batting as others have made good upward progress.
Virender Sehwag became the highest-ranked India"s batsman after returning to the top 10 for the first time since March 2006. Sehwag, who scored an impressive 344 runs in the series, has lifted one place to 10th with Pakistan"s Yunus Khan firmly within his sights.
VVS Laxman, who scored 25 and 61 not out in the series decider, has climbed three places to 15th position while Rahul Dravid shares 16th place with England"s Alastair Cook.
Dravid improves his position by two places after scores of 10 and 68 while Cook jumps four places following his contribution of 39 and 67 in The Oval Test.
Saurav Ganguly has improved his ranking by one place and now sits in 25th position while opener Gautam Gambhir, who was the second leading run-getter for his side with 310 runs, is in 37th place after jumping 12 places.
For Sri Lanka, Kumar Sangakkara just missed out on reclaiming the top slot from the West Indies" Shivnarine Chanderpaul.
Like Tendulkar, South Africa"s most accomplished batsman Jacques Kallis has also paid the price for a run of bad form by dropping out of the top 10 for the first time since March 2003.
In the Reliance Mobile ICC Player Rankings for Test bowlers, South Africa"s Makhaya Ntini has swapped places with England"s Ryan Sidebottom who missed the last Test. Ntini had figures of 7-149 which has put him in clear fifth position while Sidebottom has dropped to sixth after losing one per cent of his rating for missing the match.
England"s Monty Panesar has jumped three places to share 10th place with India captain Anil Kumble who has dropped a place following figures of 3-157 in the third Test at Colombo.
Muttiah Muralidaran is still on top of the bowling chart, leading second-placed Australia fast bowler Stuart Clark and third-placed Dale Steyn of South Africa by a comfortable margin.There is little change in the Reliance Mobile ICC Player Rankings for Test all-rounders with Sri lanka"s Chaminda Vaas returning to the top five. He has replaced New Zealand"s Jacob Oram who has slipped to sixth.
The list is still headed by Kallis with New Zealand captain Daniel Vettori second and Flintoff in third place.