Captain Harmanpreet Kaur hit a fine half-century to help India towards their biggest victory ever in the competition - an 82-run hammering - in Dubai on Wednesday.
Kaur, who won her first toss in the tournament and elected to bat, smashed an unbeaten 52 off 27 balls which propelled India to 3-172.
Harmanpreet Kaur cracked a fine half-century for India. (AP PHOTO)
They then bowled out Sri Lanka for just 90 in 19.5 overs, as the Asian Cup holders now face a .
The big win bettered India's previous best 79-run victory against Bangladesh in the 2014 edition and also lifted their net run-rate to 0.576 after two wins and a shocking loss to New Zealand in group A.
India are now second behind Australia, level on four points, with the win boosting their chances of a place in the semi-finals.
India's opening pair of Smriti Mandhana (50) and Shafali Verma (43) laid a solid foundation as they combined in a 98-run stand off 76 balls.
Both batters fell off successive deliveries when Mandhana got run-out and Verma holed out in the covers off Sri Lanka captain Chamari Athapaththu's off-spin.
But Kaur, who hurt her neck during India's win over arch rivals Pakistan, bludgeoned pace and spin in the last five overs as she hit eight boundaries and an 84-metre six over wide midwicket.
She raised her half-century with a boundary off the final ball as India plundered 59 runs off the last five overs.
Sri Lanka's chase got off to a disastrous start when they crashed to 3-6 with fast bowler Renuka Singh claiming two wickets in her first two overs and Athapaththu edging off-spinner Shreyanka Patil to the lone slip.
Fast bowler Arundhati Reddy and leg-spinner Asha Sobhana both ended up with identical figures of 3-19 as India avenged their recent loss at the final of Asia Cup against Sri Lanka with an emphatic win.
Kavisha Dilhari top-scored with 21 and Anushka Sanjeewani made 20 while Ama Kanchana (19) was the only other notable contributor for Sri Lanka.