Ramanathan was born on 16 April 1851 at the home of his maternal grandfather A. Coomaraswamy on Sea Street, Colombo in south western Ceylon. He was the son of Gate Mudaliyar A. Ponnambalam, a leading government functionary, and Sellachi Ammai. He was the brother of P. Coomaraswamy and P. Arunachalam. Ramanathan had his early education at home before joining Royal Academy, Colombo in 1861. Ramanathan and his brother Coomaraswamy entered Presidency College, Madras in 1865. The brothers completed the Intermediate in Arts and started the degree course but, following "youthful excesses" by Coomaraswamy, both were recalled to Ceylon without completing the course.
Ramanathan married Sellachchi Ammal, daughter of Mudaliyar E. Nannithamby, in 1874 at Ward Place, Colombo. They had three sons (Mahesan, Rajendra and Vamadeven) and three daughters (Sivakolunthu, Rukmini). After being widowed Ramanathan married Australian R. L. Harrison (later known as Leelawathy). They had a daughter, Sivagamisundhari.
Returning to Ceylon, with the help of his maternal uncle Muthu Coomaraswamy Ramanathan became a law apprentice under Richard Morgan, Queen's Advocate of Ceylon. Ramanathan became an advocate of the Colombo bar in 1874. He was responsible for editing law reports for the previous 36 years and later served as editor of the official law reports (the Supreme Court Circular and the New Law Reports) for ten years. Ramanathan stopped practising law in 1886 to concentrate on politics and his interest religious studies and philosophy.
Ramanathan was appointed to the Legislative Council of Ceylon in 1879 as the unofficial member representing Tamils, replacing his maternal uncle Muthu Coomaraswamy. In 1880 he founded the Ceylon National Association, of which he was president, to campaign for constitutional reform Whilst on a tour of Europe Ramanathan, his wife and daughter were presented to Queen Victoria and was called to the bar at the Inner Temple in 1886. He was appointed Solicitor-General of Ceylon in 1892. In 1903 he became one of the first Ceylonese to be appointed King's Counsel. In 1905, prior to his retirement in 1906, he went on a tour of the USA where he gave lectures on Hinduism and Hindu philosophy.
Ramanathan founded the National Reform Association in 1907. He contested the 1911 legislative council election as a candidate for the Educated Ceylonese seat and was elected to the Legislative Council, defeating physician Marcus Fernando. Ramanathan was responsible for the release of the Sinhalese leaders who had been arrested following the 1915 Ceylonese riots, travelling to the UK to make their case. He was re-elected at the 1916 legislative council election, defeating Justus Sextus Wijesinghe Jayewardene.