Sri Lanka lost three wickets before lunch but recovered to reach 143-6 at tea, leading Australia by 318 runs with four wickets in hand
Left-arm spinner Rangana Herath claimed his maiden test hat-trick to consign Australia to their lowest total against Sri Lanka today as the hosts put themselves in a commanding position for a series-clinching victory at Galle.
As many as 11 wickets fell in the dramatic morning session of the second day's play as Australia, resuming on 54-2, collapsed for 106 runs to concede a 175-run first innings lead.
Sri Lanka lost three wickets before lunch but recovered to reach 143-6 at tea, leading Australia by 318 runs with four wickets in hand.
Dhanajaya de Silva (19) and Dilruwan Perera (12) will return after the break, hoping to bat Australia out of the match as Sri Lanka close in on their second win in the three-test series.
Herath had tormented Australia in the first test at Pallekele too, exposing their vulnerability against spin bowling and claiming nine wickets in Sri Lanka's 106-run victory.
The 38-year-old haunted them again today, castling captain Steve Smith for five runs with the first delivery of his third over.
He ripped the heart out of Australia's batting in his eventful seventh over, getting Adam Voges caught at extra cover with his fourth delivery and trapping Peter Nevill plumb in front with an arm ball.
Herath struck Starc's pad with his next delivery but the leg-before appeal was turned down. After a brief chat with the spinner, home captain Angelo Mathews decided to review the decision and Herath, who claimed 4-35, was mobbed by team mates as the not-out decision was overturned.
Off-spinner Perera mopped the tail to finish with 4-29 as Australia folded inside 34 overs.
Sri Lanka got off to a shaky start and for the second time in the match, Kusal Mendis walked out to bat with his team reeling at nine for two.
Mendis, the architect of Sri Lanka's Pallekele win and their top-scorer in the first innings, however, made only seven runs before Starc sent him back.
The left-arm paceman returned figures of 3-33 to go with the five wickets he had claimed in the first innings but Kusal Perera (35) and Mathews (47) ensured Sri Lanka earned a big lead in the bowler-dominated contest.