As per the stone inscription found here, this temple was built in the 10th century by Krishnarama Brahmarayan, the chief of army of Rajaraja Cholan I. Legend has it that Ammankudi Devi after killing the demon Mahishasura, took the shivling from Mahishasura who had worn it around his neck, and placed it at Ammankudi, calling it by the name Kailasanatha Swamy. Then she took 12 years’ penance to atone for the killing of Mahishasura. At the end of the 12th year, Kailasanatha appeared and told her that she was purified from all sins and that he, along with her would remain in Ammankudi to protect the devotees.