Sri Lanka in the late 1990s was a country deep in civil war. The Liberation Tigers of Tamil Eelam had been fighting since 1983 for an independent Tamil state in the island's north and east. In 1995, the Sri Lankan military recaptured the Jaffna Peninsula after years of LTTE occupation, a major government victory. The LTTE struck back in 1996, overrunning the town of Mullaitivu and inflicting heavy casualties. In 1997, the government launched Operation Jayasikurui, pushing into LTTE territory. The Tigers responded with a campaign of suicide attacks on military, economic, and civilian targets across government-held areas. The Kandy bombing was part of this broader pattern, but it was also something more. The Temple of the Tooth was not a military installation or an economic target. It was the most sacred site of the Sinhalese Buddhist majority, and attacking it was an act of maximum symbolic provocation.

The immediate aftermath was volatile. Police fired tear gas to disperse crowds gathering near the devastated temple. A mob of roughly a thousand people attacked and looted the Sri Selva Vinayagar Hindu temple at Katukelle in Kandy, damaging statues of twenty-two deities. But the feared wider conflagration did not materialize. Community leaders, including President Chandrika Kumaratunga, urged the Sinhalese community not to retaliate against Tamil civilians, whom the LTTE claimed to represent but who had no part in the attack. According to the Mackenzie Institute, part of the LTTE's calculation was precisely to provoke the kind of widespread anti-Tamil mob violence that had occurred in the 1983 Black July pogrom, hoping that international revulsion would strengthen the case for a separate Tamil state. It did not transpire. The restraint shown by ordinary Sri Lankans in those dangerous hours was one of the few mercies of the day.

The attack drew swift international condemnation. UNESCO Director General Federico Mayor Zaragoza called it "an act of blind violence perpetrated against a place of meditation, joy and peace." UN Secretary General Kofi Annan expressed outrage, condemning the use of terror tactics and deploring attempts to divide people on religious and ethnic grounds. Amnesty International demanded the LTTE abide by basic principles of international humanitarian law. Prince Charles, in Colombo for Sri Lanka's fiftieth independence anniversary celebrations on 4 February, called the bombing "a brutal and malign act" and reminded his audience that the Temple of the Tooth belonged to the world's heritage, not only to Sri Lanka or to Buddhism. The Sri Lankan government banned the LTTE for the first time as a direct result of the attack. Defence Minister Anuruddha Ratwatte resigned, accepting responsibility for the security lapse.

After debris was cleared, the temple reopened to the public on 10 February, barely two weeks after the bombing. Complete restoration took more than eighteen months. Craftsmen reassembled what they could of the shattered moonstone; the fragments that could not be restored are displayed in a museum inside the temple complex. The nearby Queen's Hotel, Natha Devale, and St. Paul's Church, all damaged in the blast, were also repaired. In October 2003, a Kandy high court convicted three LTTE cadres involved in the attack and sentenced them to death. Two others received 680 years of rigorous imprisonment, and a third was sentenced to 490 years. The sentences reflected the enormity of what the court and the country perceived: not just murder and destruction, but an assault on the most sacred symbol of an entire civilization. The temple stands fully restored today, its rituals unbroken, its golden caskets intact, its meaning to Sri Lankan Buddhists if anything deepened by the knowledge of what it has survived.