Diyaluma Falls is 220m high and the second highest waterfall in Sri Lanka and 361th highest waterfall in the world. It is situated 6km away from Koslanda in Badulla District on Colombo-Badulla highway. The Falls are formed by Punagala Oya, a tributary of Kuda Oya which in turn, is a tributary of Kirindi Oya.

The Punagala Oya rises from the Mahakande pass and flows into the Kuda Oya, a tributary of the Kirindi Ganga, which flows into the sea near Tissamaharama. The Diyaluma Falls, the second highest in Sri Lanka, is the last of a series of waterfalls on this river. It is an impressive sight when you stand almost directly beneath the waterfall on the road. The water appears to be propelled over the cliff face and falls in one long and clear drop to a pool below beside the road. Above this big fall are several smaller waterfalls and rock pools. They can be visited by walking about 500 metres down the road and taking the estate track that turns of sharply to the left. Proceed for 15-20 minutes along this track until you come to a rubber factory, where you turn off left uphill. At the top, where the path forks, take the right branch, which leads to the pools above the main fall.

The Sinhala name Diya Luma - more correctly Diya Haluma - means water-gush. On the other hand Diya Luma may be translated as liquid light.

This alternative meaning is connected with an ancient story retold in more recent times by R. L. Brohier:
In unsettled times, when the island was disintegrated into many principalities, there was a young chieftain who was for some reason banished from his clan and forced to live in exile in the highlands of the natural rampart which rose from the maritime plain. He was betrothed to a lady of high degree who, rather than forsake her lover, was determined to join him.

All the passes leading from the low-country to the hills were strongly guarded. Consequently escape was impossible. One day, as she stood gazing at the precipitous mountainside, an idea began to take shape in her mind. Here indeed was an obscure way of leaving her home, an altogether bold and daring plan. She bribed an emissary to carry a letter to her lover disclosing how she proposed to join him, minutely setting out what he should do to assist her And so, late one evening on an appointed date she stealthily made her way to the foot of the mountain and found dangling over the face of the escarpment a rope of twisted creepers. She glanced round. No one was about.

Taking the end of the rope she lashed herself to it, and began her perilous journey upward. Every moment was packed with peril. Swayed hither and thither, dashed against the cruel jagged rocks, gripped by sickness and giddiness, she was hauled hand over hand up and up. There was every hope of her gaining the top. In fact the toilers above were even rewarded with a glimpse of their precious burden, under the overhanging lip. At that moment, however, disaster intervened. The rope caught fast in a cleft. Frantic efforts to pull it free proved fruitless. Beyond all power of human aid the lifeless body of the maiden dangled in dizzy space. They say that the Gods, moved to pity by the harrowing spectacle, caused a stream of water to gush from the mountain and veil all evidence of tragedy in a watery light, or Diya luma.