The temple is situated on the Mattanoor – Irikkoor route. Legend says that the idol in this temple was consecrated by sage Parasurama. The Sage was on the way to consecrate an idol that he had with him. As he was resting near a river, he saw milk flowing out of the udder of a cow and then the milk changed into a holy stream. As the sage meditated on Lord Siva and Goddess Parvathi, the cow disappeared. The sage consecrated the idol at the place where the milk from the Naalkaali (four-legged animal) had fallen. It is believed that the mild form of more the Goddess is consecrated here facing east. The people called it the Naalkaali temple which later became Nayikkali temple.