This paper explores the relationship between development and ethnic reconciliation in post-war Sri Lanka. The Sri Lankan government espouses the view that economic development can address ethnic reconciliation through reducing disparities in the distribution of economic and livelihood opportunities. Using the fishing industry in the Northern and Eastern provinces as a case-study, the author assesses the extent to which the government’s development initiatives have contributed towards reducing ethnic tensions in the war affected areas. This paper argues that, rather than opening new avenues towards ethnic reconciliation, the governments post-war development strategy has led to an increased irregularity in the distribution of the benefits of economic growth between ethnic communities.