Khawaja and Smith stitched together an unbeaten 59-run third-wicket partnership after the visitors lost openers David Warner (0) and Joe Burns (3) early.
Sri Lanka's Nuwan Pradeep and Rangana Herath shared one wicket each after their batsmen lost the plot to Australian bowlers Josh Hazlewood and Nathan Lyon who picked up three wickets each.
The visitors trail Sri Lanka by 51 runs in the first innings.
Warner, who was returning to the side after being out of action for six weeks with a broken finger, faced just four balls before dragging Pradeep's delivery onto his stumps.
Earlier Sri Lankan batsmen disappointed their captain Angelo Mathews who decided to bat first on a bright sunny day at the Pallekele International Stadium.
Australia grabbed an early advantage after their bowlers rattled the home batting to 84 for five at lunch and took them another 6.2 overs in the second session to pack the hosts off.
Mitchell Starc, returning after eight months of injury, drew first blood for the visitors.
The left-armer trapped Dimuth Karunaratne lbw for five in the fifth over, prompting the opener to call for an unsuccessful review of the decision.
Hazlewood, bowling with pace and variety, then trapped Kusal Mendis lbw for eight and had Kaushal Silva caught at first slip by Adam Voges for four.
In his second spell he had vice-captain Dinesh Chandimal caught from behind by wicketkeeper Peter Nevill 10 minutes before lunch.
Left-arm spinner Steve O'Keefe claimed the prized wicket of captain Mathews, caught at first slip by his opposite number Steven Smith.
Debutant Dhananjaya de Silva (24 not out) battled to survive the remainder of the first session with Kusal Perera (12 not out).
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