Normally eggs are passed out of a hen's body and incubated outside. However, in this case, the egg was incubated inside the hen for 21 days before hatching.
The chick survived and is said to be healthy and fully formed, however, the mother has died of internal wounds.
The farmer alerted local veterinary authorities of the phenomenon and a post-mortem was conducted.
PR Yapa, a vet in Welimada, told the AFP: 'I had only heard about such aberrations, but I was able to see it for myself today.'
'There were lacerations and a tear of the reproductive tract that caused the death,' he added.
'The baby is doing well.'
The story has hit headlines across Sri Lanka and proved popular on Twitter with many joking that it solves the age old conundrum of which came first - the chicken or the egg.
Another unusual chicken hit headlines earlier this week when a hen in Montana laid what is suspected to be the world's smallest egg.
The egg is just larger than a penny.