The Red Cross evacuated hundreds of wounded people from the battle zone
The International Committee of the Red Cross (ICRC) says it has been told by Sri Lanka to scale back its operations.
"They have communicated that the war is now over," a spokesman told the BBC, referring to years of bloody conflict between troops and Tamil Tiger rebels.
The news comes amid continuing concern over the fate of hundreds of thousands of civilians displaced by the war.
In the last months of fighting, tensions rose between the ICRC and the government over the fate of civilians.
The ICRC was the only outside agency with access to the area of combat, taking in aid and evacuating wounded people by ship.
Correspondents say that the announcement is significant because if the ICRC cuts back staff considerably, it could mean that eventually there is no independent monitoring of camps accommodating the thousands of displaced people.
Government troops defeated the rebels in mid-May after months of heavy fighting.
The full scale of casualties is still disputed - hundreds of thousands of people were displaced and are now in government-run camps.
As a first step the ICRC says it is to pull staff out of the Eastern Province "while winding down operations in the area".
It is not clear what will happen to the ICRC's presence in other parts of the north and east which saw more recent fighting.
ICRC spokesman Simon Schorno told the BBC the ICRC had to respect the government's decision.
He said: "Two sub-delegations are closing, Batticaloa and Trincomalee. A total of 140 national staff and about 10 expatriates worked in these offices."
But, he added, there were still "outstanding issues" to be discussed with the government.
SRI LANKA CONFLICT TIMELINE
1976 - LTTE formed
1983 - First attacks by Tamil Tiger rebels; start of 'First Eelam War'
Feb 2002 - Government and rebels sign ceasefire
2004 - 2008 - Violence mounts
Jan 2008 - Government pulls out of ceasefire agreement
Jan 2009 - Government captures Tigers' Kilinochchi headquarters
May 2009 - Government declares victory against Tigers
An ICRC spokeswoman in Colombo says the decision does not affect its work at the Menik Farm camp complex in the north of the country, where more than 200,000 displaced Tamil civilians are being held by the government.
The ICRC has had a permanent presence in Sri Lanka since 1989. It first began work in the southern part of the country in the late 1980s and continued its work in other parts as the conflict between government forces and the Tamil Tigers intensified.
"The ICRC is in the process of reviewing its set-up and operational priorities in Sri Lanka," said Jacques de Maio, the organisation's head of operations for South Asia.
"As a first step, it will close its offices and withdraw its expatriate staff from the Eastern Province while winding down its operations in the area. However, the ICRC will continue its dialogue with the Sri Lankan government on issues of humanitarian concern."
The Tamil Tigers were driven from Batticaloa and Trincomalee two years ago and the area has been relatively peaceful since then.
An ICRC statement says that "in accordance with its mandate, the ICRC reaffirms its commitment to address the humanitarian needs of those directly or indirectly affected by the recent conflict, including displaced people and returnees".