This temple was built at the spot where the eyes of Goddess Sati are said to have fallen. According to mythological tales, Goddess Sati was born at the house of King Daksha Prajapati. As time passed, she fell in love with Lord Shiva, which Daksha did not accept. However, Sati married Lord Shiva. Sometime later, Daksha organised a grand yagna and invited all the deities except Shiva. When Sati learned about this, she felt deeply hurt but went to her father's house to attend the yagna. There, she was insulted, and unable to bear the insult, she sacrificed herself in the yagna fire. Unable to bear the loss of his beloved wife, Lord Shiva started the destructive dance known as the "Tandava." Despite pleas from the other gods, he didn't stop. To prevent further catastrophe, Lord Vishnu used his Sudarshana Chakra to dismember Sati's burnt body into 51 parts, which fell at various places, becoming Shakti Peeths. Naina Devi Temple is considered to be the place where her eyes fell, hence the significance of the eyes in the main temple. The history of Naina Devi Temple dates back to the 15th century. It is believed that the idol was established in 1842 by a devotee named Moti Ram Shah. However, during a landslide in 1880, the temple was destroyed. It was later rebuilt in 1883. Since then, locals believe that the goddess has protected them from all kinds of calamities.

Naina Devi Temple is one of the main tourist attractions in Nainital, and it holds great reverence for pilgrims. Devotees visit the temple with deep faith and make their wishes known to the goddess. It is believed that the goddess fulfils the desires of all her devotees.

Inside the Naina Devi Temple complex, there is an ancient peepal tree. As you enter the temple complex, you'll first see a shrine dedicated to Lord Hanuman. Approaching the sanctum of the temple, you'll find two eyes, symbolising Naina Devi, in the centre. To her left, there is an idol of Goddess Kali, and to her right, Lord Ganesha is represented. Two lion statues, which are considered the "vehicles" of the goddess, guard the temple.

In Naina Devi Temple, devotees offer prasad, which typically includes Chunri, fruits, sweets, and flowers.