Esala Perahera is celebrated annually in the months of July or August every year. An approximately week-long holiday dedicated to honouring the Sacred Tooth Relic and the four ‘guardian’ Gods Natha, Vishnu, Kataragama, and Goddess Pattini. This is one of the greatest of all Buddhist festivals in the country. It is observed during “Esala” (July or August), the month believed to commemorate the first teachings of Buddha after enlightenment. The word ‘Perahera’ refers to musicians, dancers, singers, and various other performers with numerous elephants parading the streets around the Tooth of Temple. The festival ends with the traditional ritual, a water-cutting ('Diya Kepeema') ceremony which is held at the Mahaweli River in the area of Kandy.

It is believed that ''the Old Ceylon Kandy Perahera – the Kandy Perahera originates with the arrival of "Prince Dantaha and Princess Hemamala", the son-in-law and daughter of King Guhasiva of Kalinga in India to Sri Lanka during the reign of King Kirthisiri Meghawanna (305-331 AD)

Following the decree of King Kirthisiri Meghawanna that the Relic should be taken round the city of Anuradhapura once a year, the Esala Perahera had been followed by the succession of kings, though with interruptions caused by foreign invasions.

The most revealing narration of the Esala Perehera is found in the book written by the Chinese pilgrim who visited Sri Lanka in the 5th century A.D. The sporadic invasions by the Dravidian Kingdoms resulted in the shifting of the seat of the kingdom from Anuradhapura to Polonnaruwa, then to Dambadeniya and thereafter to other cities. In each retreat, a new temple was constructed to enshrine the Sacred Tooth Relic. Finally, after the shift of the capital to Kandy, the Relic has been undisturbed. ever since and the Esala Perahera has been held annually to rejoice and honour the Sacred Tooth Relic.