Abstract: Despite the importance of entrepreneurial knowledge in encouraging strategic behavior of SMEs, there is a dearth of literature examining this link. A sample of 50 SMEs owner managers in Badulla Divisional Secretariat was investigated with the aim of identifying the relationship between entrepreneurial knowledge and strategic orientation. A structured questionnaire was used to collect data. Overall level of strategic orientation of the studied sample was at a medium level while the entrepreneurial education level was at a high level. The regression model (52.9% R-square) confirmed that entrepreneurial knowledge is a strong predictor (P<0.01) of strategic orientation. This study informs the provincial level policy makers the direction they should take in designing and delivering the training programmes for future entrepreneur development initiatives.