Efficiency financial intermediation is an important mark for successful long-termeconomic growth. Banking system is playing a major role in financial system of SriLanka. Especially Private commercial banks fiilfilI an appreciated service in bankingsystem. Overall performance of banking sector measures from the interest rate andInterest Rate Spread (IRS) directly affects for the financial performance on the bankingsystem. There could not be found much studies about the relationship between InterestRate Spread (IRS) and financial performance of banking sector in Sri Lanka'Relationship between interest rate spread and its components as deposit interest rateand lending interest rate and financial performance is a vexing problem faced bycommercial banks in Sri Lankan context'This study is focused on corlmercial banks listed in colombo stock exchange in SriLanka. In the study considered independent variables as interest rate spread, depositinterest rate and lending interest rates impact on the financial performance ofcommercial banks individuallY.Findings of study revealed that there is a significant relationship between interest ratespread, deposit interest rate and lending interest and the financial performance ofcommercial banks in Sri Lanka by basing retum on equity as a measurement of financialperformance.