The hermitage occupies two islands, Polgasduwa and Metiduwa, in Ratgama Lake, a brackish lagoon connected to the Indian Ocean near Dodanduwa, south of Colombo and north of Galle. The terrain is mostly flat, the highest point barely above sea level. On Metiduwa, scrub and cinnamon trees give way to mangroves and palms at the water's edge. Polgasduwa holds larger trees: mahogany, mango, and jak, their canopy providing shade dense enough to cool the humid air for meditators below. A noisy colony of egrets, night herons, and cormorants breeds on the islands alongside a colony of flying foxes. Monitor lizards patrol the paths with the proprietary air of long-term residents. The hermitage itself warns visitors about the iguanas: they keep to themselves but are capable of whipping you with their tails if you step over one lying on the path.

The early years were lean. Lay supporters from Dodanduwa brought alms-food by boat each morning, and a refectory was built in 1913. The island did not legally belong to the monastic community until 1914, when Nyanatiloka's Swiss supporter, Monsieur Bergier, purchased and donated it. That same year, World War I broke out. The German monks were initially permitted to remain under surveillance, but after four months they were interned in Sri Lanka and then deported to Australia. When Nyanatiloka finally returned in 1926, he found the hermitage in utter ruin. He rebuilt it from nothing. The restoration was barely complete when the Second World War began in 1939. Again, the German monks were interned, first in Sri Lanka and then in India. They returned in 1946 to find the hermitage preserved and even improved in their absence. Lady Evadne de Silva, a long-time supporter, had donated the adjacent island of Metiduwa, expanding the monastery's territory.

The hermitage's influence on Western Buddhism far exceeded its modest physical presence. Nyanaponika, a German monk and Nyanatiloka's closest disciple, wrote Heart of Buddhist Meditation and established the Buddhist Publication Society in Kandy. The English monk Nanamoli produced what many consider the definitive translation of Buddhaghosa's Visuddhimagga, one of the most challenging texts in the Pali canon. Nanavira, also English, wrote the influential Notes on Dhamma. Nyanavimala, a German monk, became known for a walking pilgrimage across Sri Lanka that lasted twenty-five years. An American monk, Bodhesako, edited and published Nanavira's works and founded the Path Press. The hermitage's library, which holds the Pali Canon in six different scripts including Sinhalese, Thai, Burmese, Devanagari, Roman, and German, reflects this multinational scholarly community. Monks are currently working to digitally scan and preserve the collection's antique books.

In 1951, Nyanatiloka moved to the Forest Hermitage in Kandy, and the Island Hermitage passed through a succession of abbots. Since 2003, a group of young Sri Lankan monks has managed the monastery. The daily rhythm has not changed much from the early years. Monks walk for alms each morning except on full moon days, when lay devotees bring food and observe the Five or Eight Precepts. The chapter house, built over the lake, hosts fortnightly Patimokkha recitations. Tourists and casual visitors are not permitted; anyone wishing to stay must commit to at least two or three weeks and write in advance. The hermitage remains what Nyanatiloka intended it to be: a place of genuine seclusion, surrounded by brackish water and the calls of herons, where the practice of attention takes precedence over the noise of the world that lies just across the lagoon.