The temple of Lalita Devi is associated with legends. According to one of them, Goddess Sati, after performing the Daksha Yajna, jumped into the fire by assuming the Yogi Agni posture. As a result of this, Lord Shiva started doing the famous Tandav dance (the dance of destruction) while carrying the body of Sati on his shoulder. In order to stop Shiva, Lord Brahma severed her body into 51 pieces. It is said that the heart of Goddess Sati fell here and it came to be revered as one of the Shakti Peethas.
The second legend says that once sages approached Lord Brahma for help as they were troubled by Asuras (demons). To eliminate the problem, Lord Brahma created a Chakra (a holy wheel) with sun rays and asked the sages to follow it until it landed. The wheel landed at Naimisharanya, and in that way, sages found a peaceful land to live. The place where the Chakra landed was developed into a large source of water. However, the water flow of that place was too high. Seeing that, sages again approached Lord Brahma, who, this time, asked them to visit Goddess Lalita Devi. She re-established the chakra and controlled the water flow. It is also said that Goddess Lalita also appeared in Devasur Sangram for the destruction of Asuras on the orders of Lord Brahma.