Shrimp exports are one of Sri Lanka's major foreign exchange earners and account for 40%-50% of total aquaculture exports. There has been a recent and rapid expansion of the industry in the Northwestern Province (NWP) of Sri Lanka but the industry has suffered from disease outbreaks and environmental problems. Currently, shrimp farms cover nearly 3000 ha of the coastal area of the NWP. The environmental impacts of shrimp cultivation in general are well known and numerous research studies have been done. However, little work has been carried out in Sri Lanka. This study provides some necessary background to brackish water shrimp aquaculture in Sri Lanka. It focuses briefly on the development of shrimp aquaculture and the current status of the industry. Emphasis is placed on two broader aspects--impacts on the existing wetland ecosystem and on the environment. These impacts are presumed to be the main causes hindering the growth of the industry and raising widespread public protest. Current ecosystem and environmental management practices are discussed. Finally, strategic issues for management and sustainable growth are discussed.