The move to impeach Bandaranayake, the country's first female chief justice, came after she scuppered a bill that would have given more powers to President Mahinda Rajapakse's younger brother Basil, who is economic development minister.
"The chief justice and her team of lawyers walked out of the parliamentary select committee after making a statement that she is not being given a fair hearing," a lawyer close to the process told AFP.
"She will not attend future hearings."
A parliamentary official said Thursday's hearing, the third since it began on November 23, ended abruptly as Bandaranayake staged her dramatic walkout and vowed not to attend any more hearings of a panel dominated by ruling party MPs.
"She was denied details of the allegations and the right to cross-examine potential witnesses," the lawyer said. "The government also tried to introduce new allegations and that was the last straw."
The impeachment bid has also led to a head-on collision between the judiciary and the legislature controlled by President Rajapakse who has consolidated his power after crushing Tamil Tiger rebels in a military offensive in May 2009.
Bandaranayake, 54, infuriated the government last month when she said it was illegal for lawmakers to investigate her, but vowed she would defend herself against impeachment charges of professional and financial misconduct.
Her case has raised fears that the government is trying to control the courts. She told the parliamentary select committee at its outset that there was not an "iota" of truth in the allegations against her.
Bandaranayake has been accused of failing to declare around $250,000 in foreign currency, among other alleged misdemeanours.
She said the money belonged to her sister, an engineer working in Australia who was buying an apartment in Colombo, and she also dismissed allegations that she had hidden wealth in undisclosed bank accounts.
The United Nations Special Rapporteur on the independence of judges, Gabriela Knaul, has urged Colombo to reconsider the impeachment, a request made by Bandaranayake's lawyers too.
There was no immediate comment from the government or the select committee to her walkout.
Sri Lanka's opposition said it was convinced she would not get a fair trial.
"The opposition members in the select committee have been contemplating a boycott because of the very unfair nature of the proceedings," an opposition MP said, asking not to be named.
"We also want to walk out of the next hearing (on Friday) because this is a farce and we know what the outcome is going to be."
The ruling party has more than the required simple majority in the 225-member assembly to impeach Bandaranayake, who would otherwise have another 11 years as chief justice.
Bandaranayake's husband was also charged recently with corruption while holding a political appointment as the head of a state-owned bank. He too has denied the allegations.
The chief justice has consistently refused to talk to the media, but met with lawyers and judges this week to explain her stand behind closed doors.