This article examines Indian Ocean peace engagements during the late Cold War period and their outcomes for Australia's foreign relations with Sri Lanka. Using archival materials and secondary sources, it explores Australia's growing bilateral relationship with Sri Lanka at a time of heightening tensions in the Indian Ocean. Australia had vocalised support for Indian Ocean peace initiatives such as the Declaration of the Indian Ocean as a Zone of Peace, which was initially proposed by Sri Lanka at the United Nations. Australia's support failed to materialise for this initiative, however, due to its reluctance to challenge the US defence expansion. What emerged was a militarised peace in the Indian Ocean that strengthened Australia's relations with Sri Lanka, evidenced through trade, aid donations, cultural exchanges, and diplomatic missions. The strengthening bilateral relationship during the 1970s and 1980s reflected Australia's attention to smaller island states in the Indian Ocean, such as Sri Lanka, which became vital for its foreign policy turn to Asia.