Background: On December 26, 2004, a tsunami hit the southern coast of Sri Lanka, leaving thousands dead and injured. Previous research has found significant mental health problems among children exposed to major disasters. School-based universal interventions have shown promise in alleviating distress and posttraumatic symptomatology in children and adolescents. This study evaluated the efficacy of a school-based intervention in reducing stress-related symptomatology among Sri Lankan children exposed to the tsunami. Methods: In a quasi-randomized controlled trial 166 elementary school students (ages 9–15) with significant levels of tsunami exposure and previous traumatic background were randomly assigned to a 12-session structured program ‘ERASE Stress Sri Lanka’ (ES-SL) or to a waiting list (WL) religious class control group. Students were assessed 1 week prior and 3 months after the intervention on measures of posttraumatic symptomatology [including posttraumatic stress disorder (PTSD) and severity of posttraumatic symptomatology], depression, functional problems, somatic problems and hope. Results: This study shows a significant reduction on all outcome variables. PTSD severity, functional problems, somatic complaints, depression and hope scores were all significantly improved in the ES-SL group compared to the WL group. No new cases of PTSD were observed in the experimental group. Conclusion: This study adds to the growing body of evidence suggesting the efficacy of school-based universal approaches in helping children in regions touched by war, terror and disaster and suggests the need to adopt a two-stage approach toward dealing with trauma-exposed students, namely, starting with a universal intervention followed by targeted specialized interventions for those still suffering from posttraumatic distress.