"The (Nehru) Stadium Officer has no authority to allow matches there and only the Sports Development Authority of Tamil Nadu is authorised to do so. By using an authority that did not exist, the official had demeaned the sentiments of Tamil people," she said.
Jayalalithaa directed Chief Secretary Debendranath Sarangi to place the Nehru Stadium Official under suspension and initiate department-level proceedings against him.
"I have also instructed that no competitions must be held for the Sri Lankan team besides directing that they be sent back," she said in a statement here.
The team from Royal College, Colombo, had played a match against Chennai Customs Department in the friendly tie organised by a former city league football player on Friday.
Jayalalithaa's action comes against the backdrop of her vociferous opposition to India training Sri Lankan military personnel not only in Tamil Nadu but also anywhere else in the country, saying the Lankan forces had committed war crimes against Tamils in the island nation.
The AIADMK chief also slammed the Centre for allowing the Sri Lankan football team play matches in Tamil Nadu.
Jayalalithaa said she had received information that an official of Royal College of Colombo had called up an officer at Reserve Bank of India in Chennai seeking to make arrangements for some Sri Lankan football players to play friendly ties here.
Accordingly, they played the match with Customs Department on Aug 31 and coming to know this, she said, she had directed a complete probe.
"It came to be known that the RBI officer approached the (said) Stadium Officer who gave oral approval for the match," she said.
Jayalalithaa said she had also directed eight students of a Sri Lankan school who had come for a tournament with a city-based school and their coach to be sent back.
The Chief Minister criticised the Centre for allowing the Sri Lankan football team to land in India despite paying no heed to her earlier pleas including imposing sanctions on Sri Lanka till Tamils in the camps were rehabilitated on par majority Sinhalas.
She recalled the Tamil Nadu Assembly had passed a resolution in this regard.
Ruling AIADMK and other political parties in Tamil Nadu, including key UPA ally DMK, have been strongly voicing their opposition to Lankan military men being trained in India.
Speaking in unison last week, they had condemned the Centre's stand on continued training of Sri Lankan military, after Minister of State for Defence Pallam Raju said the training would go on.