The purpose of this paper is to examine the role that education can play in rehabilitation of war-affected children in Sri Lanka. Many researchers worldwide have proved that education can be used to make war-affected children to fit into the society. This paper examines how education can contribute for peace building and reconciliation in the war-affected Northern and Eastern parts of Sri Lanka. This study used qualitative interviews supplemented with observation and secondary data. Data were collected from 20 students, 05 parents of students and 10 school teachers from three war-affected areas in northern and eastern Sri Lanka. This study identifies two main types of contributions by education for peace building and rehabilitation. The first one is ‘empowerment through education’. This study finds that although, many children in the war-affected areas are denied access to formal education programs, they get the maximum benefits of educational aids provided by various individuals and non-governmental organizations. This study results reveal that such external educational aids have proven to bring positive attitudinal and behavioural changes in children. The second one is direct educational initiatives to engage children in reconciliation activities’. Significantly, exchange programs, mixed community engagement activities, games and enrolment to (ethnically and religiously) mixed schools have helped children to change their inculcated attitudes of animosity and rivalry towards the other ethnicities within the country.