Graduate Unemployment is considered an important social problem in Sri Lanka. Attempts by many governments in the past to bring a sound solution to the problem have failed. Today, the private sector is becoming the dominant player in the economy. However, it is widely observed that the current education and training system does not produce graduates to meet the private sector needs. This study was conducted with the objectives of identifying university graduates' job expectations, factors affecting their job expectations and identifying employers' needs from university graduates. The study attempts to find the nature of the gap between employers' expectations of skills and job expectations of graduates from Sri Lankan universities to make recommendations for stakeholders of the problem. Data for the study were gathered through structured interviews and surveys of selected sample of (better specify the exact number of responses from each sample category here) employers, unemployed graduates, employed graduates, current university students and university faculty members. Survey questions were designed to obtain information on perceptions and attitudes of sample respondents based on the determinants identified from the literature review. Findings reveal that possessions of university graduates of key skills sought by employers are lacking. Universities do not generate the required labor skills for the society and Undergraduates’ lack of knowledge about reality of the labour market situation. This skill mismatch leads to more number of unemployable graduates in the economy. Thus, all stakeholders: the government, the university system administrators, employers and graduates themselves must all endeavor to find a solution to this gap.