Sport development has two goals: (1) increasing the number of active participants in sport and (2) enhancing the performance of athletes. This research focuses more on the latter and how the current sport development system in Sri Lanka supports this goal. The main objective of this research was to identify the current sport development processes in Sri Lanka and to suggest elements to strengthen the current processes of sport development in Sri Lanka. The Grounded theory method was used in the review of Annual Performance Reports published by the Ministry of Sport in Sri Lanka from 2008 to 2013. In Sri Lanka, conceptual tools for sports development are recognized, but are not applied and practiced in sport development. This study identified that even though the Sri Lankan government is proving strong support for the sport development processes, there was lack of stakeholder participation and communication between processes. The strength and effectiveness of different pathways connecting the processes of attraction, retention/transition, and nurturing of athletes varied. Some pathways seem nonexistent or extremely weak. Strong connections between these three processes are believed to strengthen and enhance the sport development processes. A strong sport development system, which consists of quality sports development processes and pathways, can act as a foundation for enhancing and sustaining athlete performance.