Internet banking still remains as the coherent and most cost effective channel for the banks as well as for customers. A significant feature of online Banking or the internet banking permits customers to access their bank accounts 24/7, which is a new experience and intrinsically motivating. Service Quality is the main factor that determines the success or failure of internet banking. Inability to measure the service quality is detrimental to the growth of the internet banking. Customers tend to demand equal or higher levels of service quality based on on-line than the traditional services. In this context, the research was carried out to identify the Impact of service quality of Internet Banking on customers' satisfaction in the selected state banks in Thanamalvila regional area in Sri Lanka. The study was carried out with four dimensions as reliability, efficiency, responsiveness, security to measure the service quality of internet banking and two dimensions to measure the customer satisfaction as customer loyalty and customer attitude. Data were collected using questionnaire from 50 samples of employees in the state banks.