The County missed out on top target Shahid Afridi, who helped steer the Steelbacks to the final last season, and South Africa star Quinton de Kock.
But they have managed to snap up Prasanna, who will be available for all 14 matches in the group stage of the competition.
The 30-year-old made his T20 debut for Sri Lanka in December 2013 and most recently represented them in a World Cup warm-up game in February of this year, against India.
Northants have managed to find some outside sponsorship to fund the deal, as they did with Afridi’s return for finals day last year.
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And head coach David Ripley said: “He’s not an A-list overseas player but with the budget we have, it’s not easy to attract those sort of players.
“But we’ve got Prasanna for the whole 14 matches and that’s a real plus for us. We start the competition with a group of players and we’ll finish it with that group of players.
“He bowls good leg spin, has got a good record in first-class cricket and one-day cricket and his strike rate is high, which suggests he comes in and gives it a smack. In T20 cricket, I like that.
“I like having match-winning players in the team and if you’ve got six or seven of them, two or three of them can have a good day and you’ll win some cricket matches.
“I just think he fits our group well in terms of what skills he delivers and he’s going to be a good addition.”
Though Prasanna doesn’t have the reputation of an Afridi or a de Kock, Ripley is confident his appetite for success will help Northants.
And he said: “He’s hungry for success and as we’ve seen with Trent Copeland at the club, it’s not necessarily about being the name on everyone’s lips, it’s about having the hunger to do well.
“I’m happy about it, and the fact he can play all 14 games is key for us.
“He’s got all the skills for T20 cricket. He can win a match with the ball and with the bat because he’s got strong T20 stats.
“We’ve had a couple of people who have helped us get the player. We’re grateful for that and we look forward to having him for the first game.”