The first motor omnibus in Sri Lanka was imported in 1907 and bus transport began in Sri Lanka as an owner-operated service. There was no regulation, so when more than one bus operated on a single route, there was a scramble for the load. By the mid-1930s, malpractices in pursuit of maximum profit began to compromise safety and comfort. The setting up of the limited liability omnibus companies by the British around 1940 was the first meaningful step in regularising public passenger transport in the country.
The Ratnam Survey in 1948, the Sansoni Survey in 1954 and the Jayaratna Perera Survey in 1956 studied the bus services in Sri Lanka and all recommended that the companies should be nationalised.
The history of Sri Lanka Transport Board goes back to 1 January 1958; at the time known as the Ceylon Transport Board (CTB). The inaugural trip of the CTB took the Prime Minister and the Transport and Works Minister Maithripala Senanayake on a maroon luxury Mercedes-Benz bus imported from Germany. The bus is still owned by the Nittambuwa Bus Depot.
At its peak, it was the largest omnibus company in the world — with about 7,000 buses and over 50,000 employees. With privatization in 1979, it underwent a period of decline. The creation of a single nationalized entity made possible long-distance operations and running buses on a large number of rural routes.
First broken up into several regional boards, then into several companies, it was finally reconstituted as the Sri Lanka Transport Board in 2005. The move received bipartisan support in Parliament. It was hailed by the Joint Business Forum (J-Biz), which welcomed the revival of the CTB: this was one of the rare occasions on which the business community said a state bus service was better than privatized ventures.