"With the cessation of hostilities, the north and east of Sri Lanka have once again opened up for trade, commerce and people’s movement," the company said.
"These buses, which will be sold by the People’s Leasing Company to the country’s private sector, are to be used to improve connectivity to these regions.
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People's Leasing Company is a unit of People's Bank, a state-owned commercial bank in Sri Lanka.
Sri Lanka's 30-year ethnic war ended in May 2009 resulting in an economic revival with growth forecast at seven percent this year.
Deliveries are to be completed before March 2011, the bus manufacturer, part of India's Hinduja Group, said.
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The People’s Leasing Company order represents Ashok Leyland's largest single order for buses from the island, it said.
Delivery of the 1,000