The origin of Kadampuzha Temple is associated with the Mahabharatha, the ancient Indian myth, considered to be the greatest story ever told. However the temple as such was founded by Shree Shankaracharya and the month he consecrated Kadampuzha Temple, the day of Karthika in the month of Virshchikam (November – December) is the considered the most auspicious day and is celebrated as the festival day.

Shree Shankaracharya, during his Deshadanam, a pilgrimage to various parts of the country, came across this place while he was going to Chottanikkara Temple after his Darshan at Mookambika Temple. When he reached the place now known as Kadampuzha, he found that he could not walk cross and that his way was blocked by a Divine Presence. Even with the superior Sight that could “See” or “Understand” Divine presences, he could not fathom it. Perplexed, he meditated to understand why he failed to fathom the Divine Presence and within himself discovered that having attained the “Sarvaknanapeedhom”, his ego had somehow crept in to make him feel superior and that his ego was being shunned by the Divine Presence, making him unable to fathom it. The Divine Saint immediately set about cleaning his mind of any ego and made himself as humble and pure minded as an innocent child. He approached the Divine Presence again with utmost devotion and supplication and immediately perceived what the presence was and wherein it was emanating from. He marvelled at the Divine Presence of the Devi very strongly bonded with the Divine Presence of Lord Shiva and decided that the place should be treated with absolute reverence.

He discerned that the Divine power is emanating from the hole in the ground and took steps to consecrate the place as a temple and also constituted Lord Narasimha and Sudarshana Chakra in front of the Devi and also decided to place Dharmashasta and Nagakanyaka or either sides of the temple. He also stipulated the poojas and rituals that must be conducted at the temple and these stipulations are followed till date.

Devi is worshiped here in three forms. In the mornings she is worshiped as Vidya Durga (Saraswati) bestowing knowledge and excellence in career to all. In the afternoon she is worshiped as Vanadurga (Durga) in the Twaritha Devi form blessing the devotees with health, early marriage, and domestic harmony and in the evening as Aadi Durga (Mooladurga - Lakshmi) bestowing the devotees with wealth and overall prosperity.

Here, the self manifested Divine Presence, is worshiped as a presence only. Unlike other temples, Kadampuzha is unique in that there are no idols for the Devi.

The origin of the name Kadampuzha is considered to have been formed from;

Kadan Ambu Eitha Uzha – meaning, The Place where Kiratha Shot the Arrow. Kadan is Kiratha, Ambu is Arrow, Eitha is Shot and Uzha is Place.

There is another version also that deems that this place is ;

Kattile Anbin Urava - meaning The spring of compassion in the forest. Kadu is forest, Anbu is compassion and Urava is spring.

The name could not have been formed because of a river here since there are none. So either of the two are more apt.