15 Asoo 1574 Bikrmi Shri Guru Nanak Dev ji reached Manikaran with his two disciples Bala and Mardana. Here, Mardana felt hungry, but there was no source to cook meals. Guruji asked Mardana to lift a stone. Mardana did, and a hot water spring was discovered. As directed by Guruji, Mardana put the rolled chapatis in the spring, and to his despair, the chapatis went down. As said by Guruji, he prayed to God in case his chapatis floated, he would donate one chapati in the name of God. When he prayed, all the chapatis started floating duly baked, then Guru Ji said listen, Mardana, whoever donates something in the name of God, all his/her articles float. Since then, the Hot spring discovered by Guru Ji is still flowing, and food is prepared in that spring.

In 1940, Sant Baba Narain Hari Ji discovered this place and constructed the Gurudwara.

It is also believed that once Goddess Parvati lost her Chintamani (earring), which reached straight to Shesh Nag in Patalok. On being told by Parvati, Lord Shiva ordered the Ganas and Bhootas to search for Mani, but they failed. Shiva grew angry and opened his third eye. Naina Devi was produced from the eye of Shiva, and Manikaran became the birthplace of Naina Bhagwati. She went to Shesh Nag and asked to return Mani. Shesh Nag obliged by making a loud sniff. Due to sniffing hot water springs, and many other jewels came out. Goddess Parvati took away her Mani, and Lord Shiva became calm, and from then this place is known as ‘Manikaran’.