Chasing a huge 190-run target, England rode on Hales' magnificent maiden T20 hundred to overhaul the target with four balls to spare after losing two wickets for no score in the first over.
In an extraordinary display of power hitting, Hales punished the Lankan bowlers with half-a-dozen sixes and 11 boundaries as his blistering 116-run knock came off just 64 balls. He finished the match with a huge six off Angelo Mathews to keep England afloat in the tournament.
Sri Lanka posted a huge 189 for four as Jayawardene came up with a blistering 89-run knock while Dilshan played a perfect second fiddle with a 47-ball 55 in their huge 145-run second-wicket partnership after being invited to bat.
England, who chose to field, were guilty of dropping at least four catches. Twice they let Jayawardene off the hook.
England could not have dreamt of a worse start as they lost Michael Lumb and Moeen Ali to Nuwan Kulasekara in the very first over, without a run on the board.
However, Hales and Eoin Morgan (57) turned the match on its head with sensational hitting as the two batsmen joined hands to rattle up a 152-run stand for the third wicket.
They batted intelligently as they steadied the ship by rotating the strike and then hammered the Lankan bowlers around the park. It all started with Ajantha Mendis' over when Hales punished the spinner with two sixes and two fours as England creamed off 25 runs in the 15th over.
The contest became an edge-of-the-seat thriller as Kulasekara returned and again took two wickets in an over. He first dismissed Morgan and then scalped Joes Buttler (2).
Hales kept playing fearlessly and completed his century with a six off Kulasekara over the cover region and hit a massive six in the next ball to send the shock-waves in the Lankan camp.
They needed only seven off six balls and Hales finished it of in style with a shot, soaring over deep midwicket into the stands. Lankan bowlers struggled to grip the ball due to heavy dew on the ground.
England remain in fourth place with two points but they have played only two matches. Sri Lanka are on the top with four points from three matches, followed by South Africa (4) and New Zealand (2).