Naomi 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 from Coventry was arrested for “hurting others’ religious feelings”.
Ms Coleman is being held at an immigration detention camp after a magistrate ordered her deportation.
She is expected to be removed within days. Sri Lanka is particularly sensitive about images of the Buddha.
Ms Coleman said there was initially no problem with officials but two taxi drivers and a plain clothes police officer told her she was breaking the law and brought her to a police station to make a statement.
Ms Coleman, a mental health nurse, told the BBC: “I got to the airport in Sri Lanka. It was fine. They stamped my passport. There was no problem.
“It was just when I was taking my suitcases out, one of the taxi men at the stand stopped me and said, ‘Oh, this is a big problem in Sri Lanka, you’ve got a Buddha tattoo.'”
She said she told police in a statement that she practised Buddhism and had attended meditation retreats and workshops in Thailand, India, Cambodia and Nepal.
Ms Coleman said she had to spend Monday night in prison in Negombo, near the airport, after appearing in court.
“I went on the stand, they called me. But they didn’t let me speak or plead my case. They were just talking among themselves,” she said.
“Then they said, ‘You’re being deported.’ I said, ‘I’ve got another trip booked to the Maldives, can I just go there, I’ll leave Sri Lanka then.’ They said, ‘No, you’ll have to be deported back to your home country and you’ll need to go to prison for the night.’
Ms Coleman said she was persuaded to hire a lawyer for 5,000 rupees (£25/$38) but claimed he did not communicate with her and she did not believe her statement was conveyed to anyone.
She has been told to return to the UK but may have to wait several days because the authorities said they were carrying out extensive security checks on her “like I’m a criminal or something”.
The British High Commission in Colombo said: “We are aware of the case and are providing appropriate consular assistance.”
Sensitivity of issue
Authorities regularly take strict action against perceived insults to Buddhism, which is the religion of the island’s majority ethnic Sinhalese.
Ms Coleman arrived at Bandaranaike International Airport on Monday, having flown from India. Her tattoo features a Buddha sitting on top of a lotus flower.
Last 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 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. (BBC)