The purpose of this paper is to explore the implementation of online learning in distance educational delivery at Yellow Fields University (pseudonymous) in Sri Lanka. The implementation of online distance education at the University included the use of blended learning. The policy initiative to introduce online for distance education in Sri Lanka was guided by the expectation of cost reduction and the implementation was financed under the Distance Education Modernization Project. The paper presents one case study of a larger multiple case study research that employed an ethnographic research approach in investigating the impact of ICT on distance education in Sri Lanka. Documents, questionnaires and qualitative interviews were used for data collection. There was a significant positive relationship between ownership of computers and students' ability to use computer for word processing, emailing and Web searching. The lack of access to computers and the Internet, the lack of infrastructure, low levels of computer literacy, the lack of local language content, and the lack of formal student support services at the University were found to be major barriers to implementing compulsory online activities at the University.