Analysis of physico-chemical parameters gives an insight to the the spatial distribution of benthic communities in estuaries. With this view the present study was carried out to see whether the spatial distribution of macrobenthic fauna is governed by the physico-chemical parameters in sediment and overlying water in Negombo estuary, Sri Lanka. This study also attempted to determine the key physico-chemical determinants that govern this spatial distribution.During the study, the macrobenthic fauna at Moya, Virisiyanu Duwa, Kadol Kele, Dungalpitya, and Pamunugama within the estuary were collected and their species diversity and species richness were determined. Physicochemical parameters such as the pore water salinity, temperature, pH, sand %, silt %, clay % and OM % in sediment as well as the salinity, pH, temperature, conductivity, DO, BOD5 and NO3 -concentration in the over lying water were measured and analyzed using appropriate standard techniques.Results revealed that the species richness, species diversity, structure of the macrobenthic community and the physico-chemical parameters in sediment and the over lying water and the varied significantly between the five study sites. However, the species diversity and the species richness were positively correlated with the salinity and sand % while they were negatively correlated with the BOD5, silt % and OM % in the sediment and overlying water. It is therefore evident that the spatial distribution of macrobenthic fauna in Negombo estuary is governed by a combination of some key physico-chemical parameters such as salinity, sand %, OM % and BOD5 in the sediment and over lying water in this tropical estuary.