Objective: To describe the school neighborhood food environment of a rural setting according to the availability of foods recommended by the school canteen policy in Sri Lanka Methods: This study analyzed the cross-sectional data by considering neighborhood food stalls (n=98) across selected schools (n=30) in a rural district in Sri Lanka. Availability of healthy and unhealthy food in school neighborhood food outlets were determined by using an observational check list which was developed based on ten food categories recommended by the school canteen policy in Sri Lanka. Self-administered questionnaire was used to collect general information from the shop owners. Results: Results indicated that more than 75% of food shops sold deep fried foods while percentages of processed foods varied between 50% and 90%, whereas, majority of shops sold those carbonated beverages. It was found that all the food outlets sold bakery products. Availability of sausage buns, fish buns and tea buns were 19.2%, 73.1% and 53.8% respectively. Further, Availability of toffees, chocolates and colored foods in shops were 100%, 89.8% and 93.9% respectively. Overall, selling fruits in shops accounted for less than 20%. In terms of the dairy products in the outlets, the availability of yoghurt, curd, cheese were 85.7%, 12.2% and 24.4% respectively. However, a negligible number of stalls made the pulses available for consumers. Further, findings suggested that the consumption of starch foods and carbonated drinks among school children were 37.5% and 38.5% respectively Conclusion: In conclusion, there was a positive trend in selling unhealthy foods in neighborhood shops surrounding the schools. The food environment schools, significantly influenced on the food choices of school children in rural settings in Sri Lanka.