This dissertation organizes the Modern Sinhala lexicon within the framework proposed by Lieber in The Organization of The Lexicon, 1981. Following Lieber, Sinhala verb, noun and affix morphemes are analysed descriptively and their lexical processes, both derivational and compounding, are examined within the theoretical parameters of that work. This dissertation argues that tense marking in verb morphology and number in noun morphology (which also includes definite and indefinite marking) are best accounted for as derivational processes in contrast to the traditionally accepted inflectional processes. It is claimed that in noun and verb categories, allomorphy is a factor in the underlying representation of the lexicon. On the other hand, allomorphy in noun number marking affixes is due to a morphological rule sensitive to class membership of nouns. Going beyond The Organization of The Lexicon which is limited to morphological rules, this study includes phonological rules operating in the lexicon. Finally, in accord with the results of this dissertation two suggestions are made: First, it is essential that a complete study of Modern Sinhala phonology include an extensive investigation of the syllable structure; Second, the concept of level ordering in the lexicon should be utilized to account for the hierarchical distribution of affixes. Support for the first suggestion rests on the morpholexical rules, while the second rests on the hierarchical distribution of affixes described by subcategorization and X-bar indexing in this study. / Graduate