According to legend Sage Vasishta carry out penance at several places along the river Vasishta. He has done the penance due to his sins in the past or in his previous birth. He has a habit of installing a Siva Lingam wherever he went and Lord Siva granted him his devotion and bhakthi. While praying here, the sage wanted the god to give him a darshan in the form of Jyoti like in Tiruvannamalai. Lord Shiva granted the wish and appeared in the form of Jyoti and the sage installed the Lingam.The Lingam buried in the sands and in the following days. Once a ruler named Getti Mudali ruled this region and god appeared in his dream. He told him to take him out of the buried sands and build a new temple. The ruler went to the site and removed the sand and retrieved the Lingam and found a treasure with gold, silver ornaments. He built the temple with the treasure.Before starting the work of constructing the temple the ruler prayed to god Vinayagar and the god gave his approval. He also supervised the construction activities of the temple. After the completion of building the temple, the ruler asked the god that he had done the work of the temple according to agama sastras. Lord Ganesha shook his head in approval. Thus the god is praised as Thalayatti Vinayagar- means shaking his head in right and left directions.