Naomi Michelle Coleman was arrested as she arrived at the airport in the capital Colombo after authorities spotted the tattoo on her right arm.
A police spokesman said the 37-year-old was arrested for "hurting others' religious feelings".
A magistrate ordered Ms Coleman's deportation. She is currently being held at an immigration detention camp.
She is expected to be removed within days.
Ms Coleman arrived in Sri Lanka from India on MondaySri Lanka is particularly sensitive about images of the Buddha.
Consular assistanceAuthorities regularly take strict action against perceived insults to Buddhism, which is the religion of the island's majority ethnic Sinhalese.
The British High Commission in Colombo said: "We are aware of the case and are providing appropriate consular assistance."
Ms Coleman arrived at Bandaranaike International Airport on Monday, having flown from India. Her tattoo, featuring a Buddha sitting on top of a lotus flower, was spotted by authorities there.
Mr Ratcliffe said his tattoo, pictured here, was intended as a tribute to Buddhist teachingsLast March, another British tourist was denied entry at Colombo's international airport because immigration officials said he had spoken "disrespectfully" when asked about a tattoo of the Buddha on his arm.
Antony Ratcliffe later spoke of his "shock" at the incident, insisting that he himself followed Buddhist teachings and thought a tattoo was an apt tribute.
Two years ago, three French tourists were given suspended prison sentences for kissing a Buddha statue.
The UK travel advice on Sri Lanka warns of the sensitivity of the issue and tells visitors not to pose for photos in front of statues of Buddha.
Over the past year monks belonging to certain hardline Buddhist groups have led violent attacks against Muslims and Christians, a trend which has given rise to considerable concern among religious minorities in Sri Lanka.