The military said Tamil Tiger rebels sank a navy cargo ship in the eastern port town of Trincomalee.
Rebels attacked the 213-foot vessel with an underwater explosive device, said navy spokesman Cmdr. D.K.P. Dassanayake. He said the cargo ship was empty.
The attack took place hours before voters were to cast ballots in a provincial election. The military has accused rebels of trying to disrupt the polls.