The ministry said, the ship, known as the MV Princess Cristina, was escorted to Colombo harbour.
The ship was reported to have been seized based on information provided by a key Tamil rebel now in the custody of the government.
The suspect, Kumaran Pathmanathan, was arrested in Thailand.
The defence ministry charged that the ship was also used in human trafficking.
Government troops ended a 26-year civil war in northern and eastern Sri Lanka in May after killing the Tamil rebel leadership.