This temple was once served as a Jain Basadi offered to be built by a Jain king during 1567. The legend goes by as when once Sringeri Jagadguru Sri Narasimha Bharathi Swamiji visited Karkala, he was welcomed warmly by the king.
However, Swamiji conditioned his stay with the construction of a temple dedicated to Lord Almighty. Thus the king gave his Basadi to Swamiji and installed a magnificent stone sculptured idol of sleeping Lord Vishnu. Founded in a lake near a village named Nellikar, the idol seems to be carved out of a single black stone. The temple also houses several such splendid and fine sculptures of Basadi and is protected under Archaeological Survey of India.