Nursing education has shifted to the conventional universities in Sri Lanka during the past two decades. Since there is a significant difference between school education and university education, new nurse undergraduate has to get acclimatized with the new university environment while coping the new psychosocial challenges. Consequently, students experience various types of stress which affect their health and academic achievements. Despite several studies have reported evidences about stress among nursing undergraduates in other countries, we could not find any evidence in Sri Lanka. A descriptive cross sectional study was performed using a self-administered questionnaire to determine perceived stress levels and associated factors among nursing undergraduates at the University of Sri Jayewardenepura. The questionnaire consisted of standard Perceived Stress Scale (PSS) and personal and academic characteristics. The SPSS statistical package (version 16) was used to analyze the data. Eighty seven undergraduates representing all four current batches voluntarily participated in the study. Mean perceived stress level was 21.57 (SD=5.921). Nearly half of the students (52.9%) had high perceived stress levels and most common stress related symptoms were easily feeling tired (75.9%), get nervous (69% ), poor sleep (32.2%) and chest tightness (29.9%). High level of stress was significantly associated with peer competition (OR=2.5, 1.4-10.9), too many assignments (OR=3.9, 1.4-10.9), inadequate support in clinical area (OR= 3.2, 1.1-8.9), unrealistic expectations of the family (OR= 4.0, 1.2-13.5) and lack of guidance and counseling (OR= 4.8, 1.97-12.2). When adjusted for the influencing variables, unrealistic expectations of the family and lack of guidance and counseling were the strong predictors of reporting high stress. Almost half of the nursing undergraduates experience high level of stress due to various academic and personal factors. Unrealistic expectations of the family were the strongest predictor of high stress followed by lack of guidance and counseling. These findings have potentials for planning to improve the quality of the nursing education in the university.