Abstract: The multidimensional view of opportunity recognition is addressed differently by number of scholars. However theoretical bases in this regard are still fragmented. We addressed the suggestion of Shepherd, (2015) and assess the relationship between cognitive ability and the level of opportunity recognition of entrepreneurs in Sri Lanka. In order to answer why and how some individuals identify opportunities, the purpose of this paper is to identify the role of prior knowledge and cognitive characteristics of entrepreneurial alertness and learning in the entrepreneurial opportunities recognition process. First, the authors identified key effective factors and developed research hypotheses and assess the relationship. The authors considered research methodology including sampling and data collection, measurement model and the study conducted using small and medium scale entrepreneurs in Sri Lanka, in Western province. The findings show that all the three factors had positive impact on opportunity recognition. By using this study, entrepreneurs will be able to identify and enhance the factors that influence opportunity recognition.