Attenuation of ground‐motion amplitudes away from the seismic source is recognized as a significant issue by researchers. Of particular interest is the attenuation or propagation of seismic waves from long‐distance sources. Regions like Sri Lanka have experienced tremors from events as far as 1500 km. A recently identified diffusing plate boundary just around 300 km away from the southern tip of Sri Lanka poses significant seismic risk. However, a comprehensive study of the region with respect to the propagation or attenuation of seismic waves has generally been lacking. With the availability of new archival data of 71 events recorded at three digital broadband stations, we have estimated Q value for the northern Indian Ocean region surrounding Sri Lanka. Multiple linear regression analysis of recorded vertical‐component Fourier acceleration amplitudes yields a relatively higher Q0 value of about 389±2.35 for the subject region. Furthermore, the combined effect of upper crustal amplification and attenuation has been assessed using the standard horizontal‐to‐vertical ratio method. The negligible upper crustal modifications obtained from the analysis imply the presence of an older crustal rock stratigraphy at near‐source depths around the subject region. Source spectra of recorded events have also been derived by correcting the observed amplitudes for geometric and anelastic attenuation. The source spectra analysis resulted in a typical stress‐drop value of about 50 bars, which is consistent with Brune’s source spectra models. Stochastic modeling of a recent Mw 8.6 event that occurred in the region was undertaken based on the parameters derived from the analysis and compared with the real recorded spectra. Results show a reliable match between the simulations and the recorded spectra, which supports the validity of the estimated parameters. Seismological parameters derived from this study can provide reliable estimates of seismic hazard of Sri Lanka.