The food environment in school neighborhoods plays a crucial role in manipulating the food choices of schoolchildren. This study investigated the relationship between the food environment in neighborhoods and the dietary practices of government school students in a low socioeconomic setting in Sri Lanka. This cross-sectional study surveyed the neighborhood food environment of selected schools (n = 30) in the Monaragala District, Sri Lanka, using geographical information system (GIS) data and collected dietary information from a representative sample of schoolchildren (n = 603). Chi-square and Spearman correlation tests were performed using SPSS version 23.0 to estimate the associations between the food environment and BMI, while ArcGIS 10.4.1 was used to analyze the GIS data. The majority of the students (35.5%) were 15 years old, and approximately 51% were females. The mean BMI of the study participants was 18.14 (±3.28). More than 90% of outlets within proximity sold unhealthy foods. Consumption of confectionaries was 72.3% of the students, whereas healthy food choices ranged from 5% to 12%. A positive correlation between consuming unhealthy food and distance to outlets from school was observed (p<0.05). The risk of consuming low-nutrition food doubled (OR = 2.47, 95% CI: 1.52-3.89) among the students studying in schools where a larger proportion of energy-dense food was sold in closer proximity. In conclusion, the density and proximity of outlets that sell food with low nutrients in the school neighborhood environment were positively associated with students' unhealthy food item choices.