It was the first military fatality since the end of the government's decades-long war with the insurgents.
Military spokesman Brig. Udaya Nanayakkara said the incident took place when troops were searching a suspicious boat in the eastern Batticaloa district on Saturday.
He said the Tamil Tiger in the boat took a soldier's gun and shot at soldiers when the search was going on.
One soldier died and two others were wounded, he said. The rebel was also wounded by troops who returned fire. He has been hospitalized.
Government troops, who crushed the Tamil rebels in May, ending the nation's 25-year civil war, have now launched operations to capture the remaining rebels.
About 10,000 former rebel fighters are being held by the government.
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