The government called the victory the "dawn of the east" and held a nationwide celebration on 19 July 2007, days after the last Tiger stronghold fell.
It announced a host of development measures, and in May this year provincial elections were held for the first time.
A leader of a breakaway group from the Tigers was appointed chief minister after helping fight against the LTTE.
But a year on, troops are still just as visible in major cities, towns and even in villages in the east.
Military checkpoints and stop and search operations are aimed at preventing "infiltration" by the Tamil Tigers - locals say such massive troop deployments in civilian areas increase their feeling of insecurity.
"All those who got training from the LTTE went with them to northern areas. Yet the military views all Tamils with suspicion," says one resident of Batticaloa.
In some places the military are camped on private property. The army insist they pay compensation for using the land, but those affected say that is not the case.
Locals say many people have been randomly picked up for interrogation, on suspicion of having links with the Tamil Tigers.
Most are released after a day or two but some end up in prison.
"They arrested my son on suspicion that he might have received armed training from the LTTE. He has been in prison for the past seven months," says one man in the village of Echilampattu in Batticaloa district.
"All my efforts to bring him out have failed."
Analysts believe the LTTE's intelligence wing and other elements continue to operate in the east - officials say that is why security needs to be so tight.
Since last summer violence has continued.
The chief secretary of the eastern province was assassinated last July and this May a naval transport ship was sunk in Trincomalee harbour, hours before the start of voting.
Tamil political parties backed by the LTTE boycotted the election.
The military's victory was achieved after months of heavy fighting resulting in huge human cost.
In many cases entire villages were abandoned. More than 200,000 people became internally displaced refugees.
According to the government, about 110,000 people have been resettled in Batticaloa district. Nearly 12,000 others are still waiting.
In the district of Trincomalee the picture is similar.
Internally displaced people living in the refugee camps say they lack basic facilities like toilets and clean drinking water.
Those who have been resettled say they have still to receive support from the government.
Most villagers in resettled areas now live without electricity. Many school buildings damaged or destroyed in the war are yet to be rebuilt.
In many places students sit under temporary shelters made asbestos.
"These sheets increase the intensity of the heat. As a result the students suffer from a number of health problems," one headmaster told the BBC.
Damage to property has been immense.
Many houses have been partly or totally damaged by different kinds of bombs, shells and bullets.
Kavita Malar, a young mother who lives with her daughter, received a house worth 300,000 Sri Lankan rupees (about $2,900) as compensation after the 2004 tsunami.
It was badly damaged in the fighting, with some holes created by shells big enough to allow a dog to pass through.
"This house is not stable. Whenever there are strong winds I leave my house and go to my father's house which is nearby," she says.
"I am scared the house may crumble - I am living with fear."
According to the chief minister of the eastern province, Sivanesathurai Chandrakanth (better known as Pillaiyan), 130,000 houses are totally or partly damaged.
He says the government has plans to repair and rebuild all these houses and to complete the rehabilitation work in the next 18 months.
The government is giving 325,000 rupees (about $3,000) to rebuild completely ruined houses.
But there is a widespread perception that not many in need actually receive this financial help.
Sri Lanka's disaster and resettlement minister, Abdul Risath Bathiyutheen, told the BBC that $80m from the World Bank and $40m from the European Union had been used to build houses in areas affected by war.
He added that talks were continuing to secure a further $43m from the World Bank. Yet he is not sure how many houses are being built.
"There are a number of ministries and NGOs (non-governmental organisations) doing this work. So it is not possible to give an exact figure."
A senior official from a local NGO says continuing insecurity is the major obstacle in the development process.
"Fear of return of war prevails among the aid donors and it is preventing the flow of funds for large housing construction plans," he says.
Apart from housing, fishing was also badly hit.
Villages dotting the eastern coast were battered by the tsunami in December 2004 and most of the relief work since then has been undone by the war.
Kantaiya Padmanahban is a fisherman from Vaharai in Batticaloa district whose mother died during the tsunami.
He was given a new boat by an NGO but war erupted when he was rebuilding his life. He abandoned the boat and ran away.
When he came back after a year in various refugee camps, his home was damaged and his boat was completely destroyed.
"A shell might have fallen on top of it - a direct hit might have destroyed my boat. They have not given me any compensation to buy a new boat, nets etc, I have no work to do," he says.
In some places the government has built roads and hospitals. But the operation to win hearts and minds, it seems, has a long way to go.