Minister for Industrial Development C.V. Gooneratne was assassinated as he walked among supporters in his parliamentary district in Ratmalana, an industrial suburb of the capital, Colombo.
Gooneratne, the bomber, and 20 other people were killed, said the director of Kalubowila Hospital, Dr. W.G. Gunawardena. The doctor said the minister's wife was among seven people seriously injured and that 53 others were treated at the hospital.
There was no claim of responsibility for the bombing, but it was similar to past attacks by the Liberation Tigers of Tamil Eelam, which has been fighting for 17 years to create a separate homeland for minority Tamils.
The rebels have a suicide unit, the Black Tigers, known for targeting government officials and politicians.
A government statement said the motive was to mar "a day that was specially meant to pay tribute to the war heroes battling to maintain the...territorial integrity of the nation." War Heroes Day was declared to boost the morale of the 40,000 troops fighting the rebels in northern Jaffna peninsula.
Before the bombing, all traffic in the capital stopped and people were told to observe two minutes of silence as President Chandrika Kumaratunga said in a televised speech, "This is the most sacred moment for the nation."
Jehan Perera of the Peace Council, an independent think tank, said the bombing was probably the Tiger's response to the holiday. He said Gooneratne was "a soft target and a shocking choice" for assassination.
"He was not involved in the military end of the government. But he used to go about quite freely," Perera said.
After the bombing, mobs began attacking homes in Ratmalana belonging to minority Tamils, a government official said on condition he not be named.
Perera said Gooneratne was very close to his constituents.
"They would be so angry and upset they would want to retaliate at anyone," Perera said. "They cannot capture the Tiger. So they say these Tamil people are the nearest thing to a Tiger."
The government imposed a curfew on the bombed neighborhood and two adjacent suburbs and barred journalists from the area. The army's rapid deployment force surrounded a low-cost housing area in the neighborhood and searched for suspects, a member of the force told The AP.
The Information Department issued a statement appealing to the public "to stay calm at a sensitive time such as this when emotions are running high." It added that steps had been taken "to protect all communities from any backlash."
A survivor said the bomber had hopped out of a taxi and greeted the minister before detonating the bomb in an intersection.
G.A. Yohan, another survivor who had an injured arm and was having trouble hearing, said: " was walking beside the minister's entourage when the explosion took place. All I remember is falling on the ground."
Afterward, the bomber's severed head and limbs were scattered around a traffic island.
Police dragged one man from the scene. Later, officers said he was being investigated.
About half of the Tamil rebels are believed to be women, many recruited as children, and women are often suicide bombers. They are known to wear their hair short and sometimes dress like men.
The gender of the bomber could not immediately be determined. The disfigured head had close-cropped hair like a man, and there were trousers on the body.
Suicide bombers have assassinated several high-ranking politicians, including President Ranasinghe Premadasa in 1993 and former Indian Prime Minister Rajiv Gandhi in 1991. The Tamil Tigers denied they killed Gandhi and have never commented on Premadasa's death.
President Kumaratunga was blinded in the right eye when a woman suicide bomber tried to assassinate her in December. Gooneratne was the first member of Kumaratunga's government assassinated.
The Tamil Tigers, outlawed in the United States, Sri Lanka and India, have been fighting since 1983 to create a homeland for the 3.2 million Tamils, who make up 18 percent of the 18.6 million population. The war has left 62,000 people dead.
By Laurinda Keys