The explosion tore up the front stands of the concert venue in Colombo as Indian Bollywood star Shahrukh Khan wrapped up his three-hour show, the BBC reported Sunday.
A woman and child were killed and the injured, all audience members, suffered shrapnel wounds.
Buddhist monks objected to the event being staged on the first anniversary of the death of a popular monk, Gangodawila Soma. Khan began his concert by observing a minute's silence in memory of the monk.
Followers of the monks and fans had clashed near the venue with police who used teargas, water cannons and rubber bullets to disperse them.
2014: The Year in Music [PHOTOS]