As per Hindu legend, during the divine wedding of Shiva and Parvathi, there was heavy crowd at Kailash, the abode of Shiva. Sage Agasthya could not view event and prayed to Shiva at this place to get him a view of the event. Pleased by his devotion, Shiva appeared to the sage and his wife Lopamundra along with Parvathi in his marriage attire. Shiva made the place his abode and came to be called Kutralanathar.
Tamiraparani River reaches is descent in flat land at this place. As per another legend, sage Urosamar floated a set of flowers in the river and the first flower reached the shore at this place. The sage established a temple for Kutralathanathar and worshipped the deity here.
Image of sage Agasthya with his wife
As per another legend, the king of celestial deities, Indra slayed a demon Dwastha, the son of Sukracharya (the Guru of Asuras, the demons) as he was performing a penance to seek superior powers against the Devas.
Indra incurred Brahmatti Dosha, a sin attained for slaying the Brahmin. He roamed around a lot of places for doing penance and finally on the advise of Brihaspathi, he landed at Papanasam. Since his sin (Papam locally) was expiated in this place, it came to be known as Papanasam.