There are many legends related to the temple of Mookambika. One such Mookambika legend story is that there lived a demon called Kamhasura who had a boon from Lord Shiva. This boon was that Kamhasura couldn't be killed by any male. But unfortunately, the demon started misusing the powers and caused several troubles for the Gods and sages. This includes the disrupting of the penance of Sage Kola who was in the middle of performing rituals to the Siva Lingam. Out of anger, Sage Kola prayed to the Goddess Parvathi who incarnated as Thrisoolanayaki. Kamhasura by this time knew that his end was near. And, this was to be done by a woman. He tried to get favors from Lord Shiva so that he can get rid of this curse but instead the Goddess punished him by taking away his speech ability. Much later, Parvathi killed the demon with the help of Veerabhadra.
Kollur got its name after the name of Sage Kola who was guided by Lord Shiva the Swarnarekha Lingam. Lord Shiva indicated to the Sage when he asked how is it possible to worship the Lingam without the presence of a Goddess, that there is the combination of three Goddesses on the left side of the Lingam. Among the epic characters that went through penance at this temple are Suratha, Indra, Kashyapa, Sage Shukracharya, Bhargavarama, Pradyumna, Samadhi Vaishya, Lokadithya Brahmana. Saraswati who is one part of Mookambika is worshipped for being the Goddess of education as well as fine arts. Students come along with their parents to visit this temple for accomplishing great heights in education.
The Goddess in the temple of Mookambika constitutes two forms of power. She is considered to be the combination of Shiva and Shakti. When Adi Shankaracharya visited this place, he consecrated this image of Parvathi by using five elements of mixed metal. Out of the seven Muktislala pilgrimage sites situated in Karnataka, Kollur is regarded one of the most important. The other important locations are Udupi, Kumbasi, Subrahmanya, Kodeshwara, Gokarna and Sankaranarayana. As already mentioned, Adi Shankara has quite a close connection with this temple of Mookambika history. There is a room within the temple where it is believed to have been the meditation area of Adi Shankara. During this period, he had a vision of the auspicious Mookambika. According to sources, Mookambika constitutes the powers of Saraswati, Mahalakshmi and Shakti.