"He was arrested early this morning for drinking and driving after the vehicle driven by him hit a three wheeler and injured its driver," police spokesman Ruwan Gunasekera told Reuters.
"He has been granted bail. He will be produced in the court tomorrow (Monday)."
Karunaratne, who has no history of disciplinary problems, or his lawyer was not immediately available for comments.
Sri Lanka Cricket confirmed the incident and said it will follow due process in determining the future course of action.
"Sri Lanka Cricket wishes to inform that a road accident has occurred in the early hours of Sunday between a three-wheeler and a vehicle driven by national player Dimuth Karunaratne," the board said in a statement.
"Dimuth is undergoing due legal procedures with regard to the incident.
"In the meantime, Sri Lanka Cricket will also follow the due process as per his 'Player Contractual Obligation' with the organisation and conduct an inquiry in order to take necessary action."
Sri Lanka won a two-test series against South Africa last month under Karunaratne's captaincy to become the first Asian team to win a test series in the African nation.
The left-handed opening batsman has played 60 tests for the island team.
(Reporting by Shihar Aneez; editing by Sudipto Ganguly)
