Wickets tumbled in the first hour of the day as Dale Steyn, the chief destroyer, walked away with 6/34.
The row supposedly started in March when Michael Clarke sledged Dale Steyn.
Morne Morkel took five wickets as the hosts were bowled out for 154 in 41 overs.
South Africa are among the favourites to win thequadrennial tournament.
Sri Lanka need 260 runs to win on Day 5 of the first Test against the Proteas in Galle.
Dale Steyn has been named the leading cricketer in the world for 2013.