A spokeswoman for the Navy, Captain Indica De Silva, said that after several hours of operations to tow the vessel into the deep sea, the operations were stopped because the rear hit the seabed, which could have caused further damage.
By Wednesday evening, the front of the ship was still floating on the water, and the back sank.
Officials said the ship was partially sunk, but the rescue team continued to discuss how to prevent the entire ship from sinking on the spot.
A Navy spokesman said no oil spill had been detected, but if it did, they had the resources to contain it in a limited area.
The ship is currently on the outskirts of Colombo Harbor.
Sri Lanka will demand compensation from the parent company that owns the ship, while police have launched a criminal investigation into the fire.
The Marine Protection Authority said the burning of the X Press Pearl had caused a major environmental disaster, as beaches from the south coast to the west coast had been damaged by debris that had been thrown ashore.
The government said a large number of marine life had died as a result of the pollution caused by the fire, while the Department of Fisheries had imposed a temporary ban on fishing from the south to the west coast.
In recent days, more than 1,000 people have been involved in cleaning up the damaged beaches, and people have been warned not to touch the rubbish, as it could be harmful to health.
The X-Press Pearl is registered under the flag of Singapore and on May 15 carried +1486 containers with 25 tons of nitric acid, some other chemicals and cosmetics from the port of Hazir, India.
The ship transmitted the signal of the accident, being near the port of Colombo on May 20, before it caught fire. The Sri Lankan Navy sent its ships to fight the fire.
(All images from VCG)