The singer - who fronts chart- topping group Texas - was devastated when a friend showed her happy snapshots of a six-month-old baby later swept away by the giant wave.
Sharleen - herself a mum to two-year-old daughter Misty Kyd - spoke just before going on stage to close Scotland's all-star Wave Aid concert, which raised £400,000 for the victims.
The fund-raiser at Glasgow's SECC also boasted top Scots acts such as Franz Ferdinand, Travis and Belle And Sebastian.
Other acts in the star-studded line-up included Eddi Reader, Deacon Blue, Idlewild, Mogwai and Mull Historical Society.
Sharleen revealed: 'A girlfriend of mine was on holiday in Asia with another couple who had a six-month-old baby.
'My friend came home from the trip before them and put her holiday photo-graphs in to be developed.
'The films were full of shots of them all enjoying a break in the sun.
'When the tsunami wave came, the dad of the other family grabbed the mother and their child and sandwiched them between himself and a tree.
'But when the wave hit him he lost his grip and the baby was swept away.
'My girlfriend had pictures of herself with her two-year-old daughter - the same age as my little girl - holding the couple's baby.
'It was heartbreaking. I can't comprehend how people are able to carry on in a situation like that but people do. They're very, very brave.'
Texas interrupted recording sessions for their new album to appear at last night's fund-raising gig.
Sharleen also revealed her horror at seeing TV news pictures of the disaster unfold.
She said: 'My daughter's nanny's boyfriend had been working in Sri Lanka.
'She heard about the disaster on television and called me. I switched on my TV and saw what had happened. Luckily, he'd been in the mountains so he escaped the devastation.
'I had a lot of other friends in affected areas like Sri Lanka and India. Thankfully, they were okay.
'When you see those terrible images on television it's weird because you become quite selfish.
'You just think, 'please God, it's nobody that I know'. You can't help feeling like that.
'The next emotion is worrying just how people are going to cope in the disaster areas.
'When you have a child of your own and hear about young kids being swept away it makes you even more sad. I found it quite difficult to watch the news because of that to be honest.
'In a strange way, it's too much to take in.
'I don't think there can be anybody who doesn't know someone who's been affected in some way by this terrible natural disaster.
'That shows you just how vast a scale this disaster has taken.'
Texas had no hestitation in signing up for the fund-raising show.
Sharleen said: 'We were happy to be asked in the first place. It was a very worthwhile cause.
'It always seems so pretentious when all the celebrities get rolled out for events like this. You always think, 'oh my God, here they come to bring the money in'. But I just think the world has been so giving already without any celebrities being rolled out.
'It's going to take such a long rebuilding process to put people's lives back together.
'It's affected the world - almost every country. As a human being, if you're asked to do something you're going to say yes.
'So if battering out a song - which is not exactly difficult for us to do - is what it takes we're happy to do it.'
After the gig, Texas will then resume recording songs for a new album - their first since Be Careful What You Wish For in 2003.
Sharleen said: 'We're back in the studio recording - on the music treadmill again.
'The songs are sounding great. It's just good to be writing songs once more. We're never away for too long - working away and writing constantly.'
Last night's gig is not the first time the generous Texas singer has helped boost the relief fund for the disaster, which has killed more than 250,000.
Sharleen was among a host of stars who donated to a charity auction organised by Spirit Aid Scotland in Glasgow's Oran Mor bar on January 8.
Her autographed Stratocaster Fender guitar was one of the top lots and the whole auction raised £40,000.
The star also performed live on the record-breaking radio marathon on January 17, where 28 million tuned in to hear 300 commercial stations link up for a 12-hour show.
But Spiteri is just one of millions who have done their bit to raise money for the disaster fund.
Ordinary Scots have donated more than £30million already.
Tycoon Tom Hunter gave £1million to rebuild schools and create a tsunami warning system in the Indian Ocean.
Last night's sell-out gig will boost the relief fund even further. Travis bassist Dougie Payne admitted he was staggered by Scotland's fund-raising efforts and said he was thrilled to be part of the charity gig.
He said: 'You'd rather it wasn't happening at all because you wish the tsunami tragedy never occurred.
'But the response from the Scottish music industry has been overwhelming. The bill has a great line-up and we're very excited.
'It's important everybody does what they can. If that means us standing on stage playing some songs, we'll do it.'
Heartbreaking: Child's tsunami tragedy brought home the full horror of the disaster to SharleenSaying no to this event was not an option. The people affected by this disaster need all the help they can get.
Ricky Ross, Deacon Blue To see the death toll rise and rise was terrible. There's never been any natural disaster on that scale in my lifetime Colin MacIntyre, Mull Historical SocietyI don't think of concerts in historical terms but it's great to have so many bands of the same generation playing. Roddy Woomble, IdlewildIt wasn't a difficult decision for us and, by the looks of the response from other bands, it wasn't for anyone else either.Stuart Murdoch, Belle and Sebastian