It was the second-biggest defeat by run-margin in the tournament history after Namibia's 256-run loss to defending champions Australia at Potchefstroom in South Africa in 2003.
Sri Lankan skipper Mahela Jayawardene (85), Kumar Sangakkara (76) and Chamara Silva (55 not out) feasted on a mediocre Bermudian attack to help their team post a challenging 321-6 after electing to bat.
Bermuda were then clueless against Sri Lankan seamers before being dismissed for an embarrassing 78 in just 24.
4 overs.
Farveez Maharoof finished with 4-23, while Lasith Malinga grabbed three wickets with his deceptive round-arm action.
Off-spinner Muttiah Muralitharan took two wickets.
Lionel Cann (28) and David Hemp (14) were the only batsmen to reach double-figures in a dismal Bermudian batting performance.
India and Bangladesh are other sides in Group B, with the top two advancing to the next Super Eight stage.
Despite the easy win, Jayawardene insisted the Bermuda attack had made his batsmen