Panakala Narasimhaswamy is situated on the top of the Mangalagiri hill, which has been attracting pilgrims for a very long time, and from all parts of the country. The temple is situated midway on the side of a hill. Mangalagiri hill means an propitious hill, and it is a part of the Eastern Ghats. The origin of this temple with its presiding god known as Panakala Narasimhaswamy can be traced to the Krithayuga.

This place is one of the 8 important Mahakshetrams in India. The eight places where Lord Vishnu apparently evinced himself:
(1) Sri Rangam (2) Srimushnam (3) Naimisam (4) Pushkaram (5) Salagamadri (6) Thothadri (7) Narayanasramam (8) Venkatadri
Thotadri is the present Mangalagiri. There are three Narasimha Swamy temples in Mangalagiri. One is Panakala Narasimha Swamy on the hill. Another one is Lakshmi Narasimha Swamy at the foot of the temple. Third one is Gandhaala Narasimha Swamy at the top of the hill.

History :
The Brahma Vaivarta Purana details the history of the place is mentioned. The mountain itself is in the shape of kneeling elephant as seen from a distance. Even today the hill presents the appearance of a reclining elephant. There is also an ancient ratha belonging to the temple, with ornamental woodcarvings illustrating the scenes from the great epics of Bharata, Bhagavata and Ramayana. The popular legend is that the offerings to this Lord were, honey in Kitayuga, ghee in Dwaparayuga, milk in Tretayuga, and Panaka or jaggery water in this Kaliyuga. This offering of Panaka is made even now..

Panakam Drinking God
The Lord who is worshiped here is Lord Narayana in his incarnation as Narasimha Swamy. The Jaggery water is poured into the mouth of the Lord, and Lord Narayana shows that he has fully satisfied himself, when half of water is thrown back as a prasada to the devotees. There's a belief that Narasimha swamy takes the jaggery water inside when devotes offer and the sound of him gulping the panakam is clearly audible gradually the sound becomes so clear and he leaves the excess back, thus he's popularly known as Panakala Swamy. The most interesting fact is entire shrine is free from ants and flies though the sweet is spread all over.
The Volcano Mystery
The hill on which the Temple is constructed is a passive volcano. The geological survey of India has records that dates back to the 1800's which corroborates this fact. Locals here believe that the panakam that devotees pour to the lord quenches the volcano that lies dormant beneath the hill. The sugar compounds supposedly counter react with the Sulphur compounds of the volcano. Although fantastical, this claim does seem to hold some weight as the Panakam that has been offered has disappeared without a trace. As the construction work for the capital moves ahead at full speed, research on this possible volcanic hill has intensified. Devotees continue feeding the lord with the Panakam, while the mystery endures.