To rein in communal violence, a state of emergency has been imposed by President Maithripala Sirisena's government.
The commission made up of three retired judges, will inquire and assess the loss of lives, damage to property and also what laws were broken and any lapses by authorities, and who instigated the violence.
Tensions remain high across Sri Lanka after the violence broke out following the death of a man from the mainly Buddhist Sinhalese majority last week.
Sri Lankan President Maithripala Sirisena on Saturday appointed a panel to probe the recent anti-Muslim attacks in Kandy district.
Police said almost 150 people, including the main instigator, have been arrested over the unrest.
A total of 146 suspects have been arrested in Kandy - 135 over violence and 11 for violating the curfew - since March 4, a media report said yesterday.
The suspected leader of the group, Amith Jeewan Weerasinghe, and nine others were detained on Thursday on suspicion of involvement in attacks on mosques and Muslim-owned properties in the central Kandy district by nationalist crowds. Internet access within the district was restored on Friday, but the island-wide ban on Facebook continued despite pledges to have it lifted by Saturday.
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A large number of Muslim-owned businesses in the island nation remained shut in protest against attacks by mainly Buddhist Sinhalese, but some shops in the Muslim neighbourhood opened on Friday.
Army chief Mahesh Senanayake visited Kandy on Thursday and promised an increased military presence near mosques. There were no casualties.
Sri Lanka received about half a million tourists in 2009, but the numbers shot up to 2.1 million in 2017, with almost half a million visiting the island in the first two months of this year.
"Finally, the global community has to impress upon Sri Lanka in no uncertain terms that the country will never achieve its full potential without settling its ethnic and religious differences in a peaceful and just manner".
Sinhalese Buddhists are the majority ethnic group in Sri Lanka, making up 75 percent of its 21 million people.
Activists and Buddhist monks staged demonstrations in Colombo on Friday condemning the violence against the Muslim minority and asking the government to end impunity for such attacks.