In Tretayugam, there lived a sage by the name of Yadarishi, son of the great sage Rishyasrunga and Santa Devi who did penance inside a cave with the blessings of Anjaneya on this hill between Bhongir(Bhuvanagiri) and Raigiri (Now in Nalgonda district of Andhra Pradesh,India). Pleased with his deep devotion, Lord Narasimha, an incarnation of Lord Vishnu appeared before him in five different forms as Jwala, Yogananda, Gandabherunda, Ugra and Lakshminarasimha. They later manifested themselves into finely sculpted forms that later came to be worshipped as Pancha Narasimha Kshetram.

           As the legend goes, the Lord appeared first as Jwala Narasimha (Lord as a flame), when Yadarishi was unable to face the intensity of this apparition, he appeared in a peaceful form as Yoganarasimha (Lord in a Yogic Padmasana posture with open palms on the knees). Not satisfied with the Lord appearing alone, Yadarishi sought to see him with this consort, so Lord is said to have appeared with Lakshmi on his lap, known as Lakshmi Narasimha Swamy. To see these three forms one has to go through an entrance that narrows itself into a dark cave. Interestingly, the cave is formed under a huge rock, which forms a sloping roof into a height of just 5-ft in the middle for the passage inside. While going through this constricted passage one has to necessarily lower the head slightly. Thus the very natural formation of the cave itself makes one bow involuntarily to the Lord.

          At the end of the cave, there are the actual images of the Lord. One can see two rocks fastened to each other and forming a vertical cup of about one -foot between them. On the other side of the rock, we can see the image in the shape of a serpent head and ending like its tail. This is said to be the aspect of God known as Jwala Narasimha, first manifestation of Lord. Popular tradition has it that a divine serpent still moves about the image. On the opposite rock, there is another image of Lord seated in meditation (Padmasana posture) which is the image of Yogananda Narasimha, the second manifestation of Lord, along with the The third manifestaion as Lakshmi Narasimha on the same rock. The fourth form, Ugra Narasimha(Fiery form of Narasimha), reveals His Fierce Mouth to us as the wide entrance to the cavern itself because it was beyond the strength of a sage to see that form and Gandabherunda ( the garuda pakshi or the eagle) is the fifth form of the Lord which is said to have been found sculpted in rock underneath the Anjaneya, known as 'Kshetrapalaka' (or the one who ruled over that hill). This form is known only by the presence of an eternal lamp that burns within a crevice underneath Sri Anjaneya sannidhi. All these forms are known as "swayambhu" or self emanated. As these rupams of the Lord are sometimes difficult to see in the small crevice inside the cavern that serves as His sannidhi, Lord Narasimha and Lakshmi stand together as large silver utsava murthis as Sri LakshmiNarasimha. It is this form of the Lord and Lakshmi that are known and adored by all the devotees visiting the Temple. Yadarishi is said to have been granted his wish that the place where the Lord appeared will be known by his name as Yadagiri (giri means hill in Sanskrit, and gutta which means a hillock in Telugu seems to have been a latter-day suffix) and that Lord Lakshmi Narasimha will be worshipped for many years to come.

         There are Puranic and traditional accounts of this Shrine, which are widely popular among the devotees. There is mention about the origin of this temple in the Skanda Purana, one of the famous 18 puranas.

        Glowing bright atop the sikharam of garbha griha(Sanctum sanctorum) of this cave temple is the golden Sudarshana chakra (about 3 ft x 3ft) of Lord Vishnu (whose reincarnation is Lord Narasimha) the adornment as well as the weapon is a symbol this temple is identified by from as far away as 6 km. It is said that many years ago the chakra moved in the direction from which the devotees came as if like a compass guiding them towards itself.

         Lord Narasimha is believed to have been worshipped by sages (rushis). The region of Yadagirigutta is reputed to be a "Rushi Aradhana Kshetram" or the place of worship for sages .

         As the belief goes, Lord Narasimha has taken on the role of a "doctor" and is known as "Vaidya Narasimha" by his devotees at this shrine to cure many chronic diseases and the role of a 'do gooder' to those who are under the influence of bad planets, witch craft and black magic. Many instances are cited of the Lord appearing in the dreams of the devotees, and administering medicines and operated the patients and blessed them with good health. Many devotees tell of vivid dreams in which the Lord comes to heal them from chronic or terminal illnesses, and even mental or emotional problems. A mandala (40 day) pradakshina is very popular made by many a devotee cured of a long standing ailment or chronic disease. Often times, the Lord Himself has imparted mantrOpadEsham to select devotees in their dreams.

         Another Legend also has it that Sriman Narayana, pleased with YAda's tapas, sent Sri Anjaneya to direct the rishi to a holy spot, where the Lord appeared to him in the form of Sri LakshmiNarasimha. This spot is marked by a temple located at the foot of the Yadagiri hillock, and is located about 5 km from the present temple. There the sage worshipped the Lord for many years.

        After Yadarishi attained mOksham, a number of tribals, hearing of the Lord's presence, came to worship Him at this temple. But, not being very learned, these devotees began to engage in improper worship. Because of this, Sri LakshmiNarasimha moved into to the hills. The tribals searched for many years to find their Lord, to no avail.

         After many years had passed, the Lord appeared in the dream of a devout lady among the tribe, directing her to a large cavern wherein He revealed Himself to all as five majestic Avatharams.

The Aradhanam and Puja in this temple are performed according to Pancharatra Agamam. The puja vidhanam (Puja procedure) was set by Late Sri Vangeepuram Narasimhacharyulu who composed Yadagiri Suprabhatam, Prapatti, Stotram, Mangalashasanam and served as Sthanacharya of this temple