Skipper Dimuth Karunaratne led Sri Lanka's fightback with a gutsy 35 not out as the hosts reached 56-1 in reply to Australia's 364 on day two of the second Test in Galle on Saturday.
Cameron Green took a stunning catch at gully to remove Pathum Nissanka (six) but Karunaratne's unbroken 53-run partnership with Kusal Mendis frustrated Australia, reports Reuters.
Karunaratne, who was hit on his shoulder by a Mitchell Starc delivery, got a reprieve in the final over before tea when Mitchell Swepson spilled a return catch.
Mendis was on 23 with Sri Lanka still 299 behind.
Earlier, left-arm spinner Prabath Jayasuriya claimed 6-118 in his debut Test to help Sri Lanka bowl out Australia.
Australia could not make the most of their strong start and added 66 runs to their overnight score before losing their last five wickets in the morning session.
Overnight batsman Steve Smith ran out of partners and remained unbeaten on 145, which included 16 fours.
Australia are 1-0 ahead in the two-Test series.