Michael Clarke passed Ricky Ponting's previous national record of 1,544 runs and went on to score 106 to continue his stellar 2012 as a heavy defeat loomed for the hapless Sri Lankans in Melbourne.
But it was yet more misery for Shane Watson, who missed out on his third Test century and his first hundred since October 2010 when he fell for a Sri Lankan trap on 83.
At tea, Australia were 332 for six with Mike Hussey on seven and Mitchell Johnson not out 11.
Australia had stretched their lead to 176 runs over the tourists with four wickets still intact, leaving the undermanned Sri Lanka looking down the barrel.
Clarke began the Melbourne Test needing 56 runs to break Ponting's national record and upon his dismissal he had amassed 1,595 runs at 113.92 in Australia's final Test of the year.
He was caught by rival skipper Mahela Jayawardene in the slips off Shaminda Eranga in the middle session.
The Australian skipper, who was in doubt ahead of the game with a hamstring injury, has also scored a triple century and three double centuries in an extraordinary 2012.
It was not a chanceless innings with Clarke having a let-off in Rangana Herath's 17th over when substitute 'keeper Kumar Sangakkara missed a tough stumping chance on 54.
He was also dropped by Tillakaratne Dilshan on five late on Wednesday's first day.
Clarke put on 194 runs for the fourth wicket with Watson, who soon followed his skipper back to the dressing room after again failing to convert a half-century into a ton.
Watson's patient 265-minute vigil came to an end when he pulled Dhammika Prasad straight to Thilan Samaraweera at deep mid-wicket and he trudged dejectedly from the ground.
Matthew Wade only lasted six balls for one before he pulled Prasad to Eranga two overs later.
Sri Lanka's injury problems multiplied with paceman Chanaka Welegedara pulling up four balls into his 15th over gripping his right hamstring and he left the field immediately for treatment.
Welegedara went to hospital for scans and left his team a bowler short as Australia continued to build their innings lead.
The tourists went into the second day already without wicketkeeper Prasanna Jayawardene with a hairline thumb fracture suffered while batting in his team's first innings on Boxing Day. Sangakkara took over behind the stumps.
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