Instead of being laid by the hen and incubated in the nest, the egg was incubated inside the hen for 21 days and then the chick hatched inside the mother.
The chick is normally formed and healthy, veterinarians say, although the mother hen died.
The government veterinary officer in the area, P.R. Yapa, said he had never seen anything like it before, the BBC reported.
An examination of the hen's carcass showed the fertilized egg had developed within the hen's reproductive system but stayed inside the hen's body until it hatched, Yapa said.
The examination showed the hen died of internal wounds.
The story has made headlines in Sri Lanka, the BBC said, with one Sri Lankan newspaper carrying the headline: "The chicken came first; not the egg."