Rajapaksa's United People's Freedom Alliance increased its parliamentary gains to 144 seats in a 225-member Parliament after new voting but fell short of the two-thirds majority it sought to make constitutional changes.
A revote was held Tuesday in some areas affected by fraud and other seats were allocated.
Jayaratne, 79, has been in politics for nearly 50 years and has overseen several key ministries. A Cabinet will be sworn in later.
He was first elected to Parliament in 1970 and is a founding member of the Sri Lanka Freedom Party, the second largest in Sri Lanka and the main party in the ruling coalition.
Jayaratne will play a limited role under Rajapaksa, who is the country's executive president. Rajapaksa has the power to appoint ministers, justices, military brass and police chiefs, or to sack them. The prime minister is largely a figurehead who heads the government in Parliament.
The parliamentary victory follows Rajapaksa's re-election in presidential polls three months ago.
The final results mean the ruling party can form a government with a simple majority, but it is six seats short of its goal of a two-thirds majority, which Rajapaksa had asked for in order to make unspecified changes to the constitution.
Government officials have speculated the planned changes may include electoral reform and provisions against promoting separatism after the government's military victory against the Tamil Tiger rebels last year.
Despite opposition allegations that the president wants to monopolize power, he is a hero to many of the country's Sinhalese majority for his role in the war victory.
The UPFA already secured 117 seats after the April 8 election.
However, election officials ordered a revote to elect 16 lawmakers after allegations of intimidation and fraud.
Another 29 seats were to be distributed among parties according to their vote percentage.
On Wednesday, the Election Department said Rajapaksa won 10 of the elected seats in the revote and secured 17 more seats according to the percentage for which he will appoint members.
His nearest rival, United National Front, secured 60 seats. An ethnic Tamil party and a coalition led by the country's jailed former army chief won 14 and seven seats, respectively.
Gen. Sarath Fonseka was arrested in February, weeks after he unsuccessfully challenged Rajapaksa's presidency. He now faces a court-martial for allegedly planning his political career while still in uniform and breaching regulations in purchasing military hardware.
Fonseka's supporters deny the allegations and say Rajapaksa is punishing Fonseka for daring to challenge him.
Meanwhile, Amnesty International called on the new Parliament to drop long-standing anti-terrorism and emergency laws because the civil war is over.
“Perpetuation of the emergency is now just being used as a weapon against political opposition, and as a quick fix for poor law enforcement practices and a dysfunctional justice system,” said Madhu Malhotra, Amnesty International's Asia-Pacific deputy director.
Sri Lanka has been under emergency rule for most of the past 30 years. The government contends the laws are still needed to deal with remnants of the Tamil Tiger rebels and to prosecute those in custody.
The laws give the police and military wide freedom to search, arrest, and detain suspects for long periods.
