Introduction Instrumental activities of daily living (IADL) are cognitively complex activities related to independent living in the community. Robust IADL scales are needed, however the psychometric properties of instruments have been little evaluated. There is no validated instrument for Sri Lankan older populations. Sri Lanka has the highest proportion of older people in South Asia with rapid population ageing. Therefore, it is essential to have standard instruments to assess activity limitations. We aimed to cross-culturally adapt the original Lawton Instrumental Activities of Daily Living Scale from English to Sinhala and evaluate the psychometric properties of the Sinhala version. Methods Cross-cultural adaptation of the instrument was performed. The instrument was validated in a sample of 702 community-dwelling older adults aged 60 years and above in Sri Lanka. Reliability (internal consistency and inter-rater reliability) was assessed. Construct validity of the scale was evaluated by performing exploratory and confirmatory factor analysis and testing convergent and divergent validity. Results The Lawton IADL scale was successfully adapted to Sri Lankan context. Internal consistency of the scale was very high (Cronbach’s alpha = 0.91). Very good inter-rater reliability was observed with very good agreement for all items. Inter-class correlations for overall IADL score ranged from 0.57 to 0.91. Results of the exploratory and confirmatory factor analyses supported the unidimensionality of the scale. Goodness of fit indices in confirmatory factor analysis were in acceptable range (CFI = 0.98, SRMR = 0.06, NNFI = 0.97). Strength of associations were significant and in the expected direction. Results of the known group validity were also significant, confirming the convergent and divergent validity. Conclusion The Lawton IADL scale was successfully translated and culturally adapted to Sinhala language. The Sinhala version demonstrated excellent reliability and construct validity. Given good psychometric properties, this scale would be recommended for use in future research.