England needed to chase the 170-run target in less than 13 overs to qualify for the semifinals but paceman Malinga's performance (5/31) made it a lop-sided affair.
England ended 150 for nine through a fighting 67-run knock from Samit Patel and his 51-run stand for the eighth wicket with Graeme Swann (34).
Sri Lanka's win pushed England out of the tournament since they had just one win from three Super Eight matches in Group I while the Caribbean side had two.
Image: Sri Lanka's Lasith Malinga (C) celebrates the wicket of England's Jos Buttler with teammates during the ICC Twenty20 Cricket World Cup's Super Eight match between England and Sri Lanka at the Pallekele International Cricket Stadium in Pallekele on October 1, 2012.
Text: PTI Images: AFP