Key said his presence at the Commonwealth Heads of Government Meeting (CHOGM) this week did not imply support for the Sri Lankan government, which faces criticism over the alleged massacre of Tamil civilians in the final months of a separatist war in 2009.
"We're not going to endorse Sri Lanka. This is not a bilateral meeting with Sri Lanka," Key told TVNZ.
"They are the hosts of CHOGM and we're an important member of the Commonwealth.
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India announced on Sunday that Prime Minister Manmohan Singh, who has been under pressure to stay away from his country's large population of ethnic Tamils, would skip the November 15-17 summit.
Canadian Prime Minister Stephen Harper has already said he will boycott the event, but Key said the absence of the high-profile leaders would not change his mind about attending.
"There are over 50 countries in the Commonwealth (and) everybody else is going," he said, adding: "We could boycott it, obviously that's a possibility, but I just don't think that