No reason was given for cancellation of the Secretary-level talks which were to be held here for three days.
"The Annual Defence Dialogue with Sri Lanka has been called off," a source told PTI, adding new dates have not been decided yet.
During the talks, the two sides were to discuss ways to strengthen defence ties and finalise future military exercises.
The decision has come at a time when Tamil Nadu parties are up in arms over India's engagement with Sri Lanka.
However, India has also maintained that it will not cease military ties with Sri Lanka and continue to provide training to its personnel in Indian military academies and institutions.
India had shifted the exercise between Special Forces of the two countries from Belgaum in Karnataka to Nahan in Himachal Pradesh.
Likewise, it had also instructed the Navy to hold war games with the Lankan Navy away from the waters of four South Indian states.
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