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The temple is dedicated to Lord  Shiva and is one of the oldest existing temples in the state. It is believed to have been built around 650 CE in Nagara style and has all the main features of the pre-10th century Orissa-style temples. 

The temple is one among the Parashurameshvara group of temples.

 The temple is the first in Bhubaneswar to contain depictions of Saptamatrikas, namely, Chamunda, Varahi,  Indrani, Vaishnavi,  Kaumari, Shivani and Brahmi. 

Parashurameshvara Temple was built by the Shailodbhavas, who had Shiva as their family deity.

The Shailodbhavas also respected the Shakta deities and depicted Shakta images on the walls of the temple.

The temple contains the earliest representation of a six-armed Mahishamardini (Durga) sculpture. From the chest upward, the sculpture is sculpted with a headdress, karna kundala (ornament), mala (garland), and kankana (anklet). Durga is seen holding a sword in the upper left hand while in the upper right hand, she is seen pressing the face of the demon buffalo.

In her left middle hand, she is seen piercing the neck of the demon with a trishula (trident), while in her lower left hand, she holds a pointed weapon. In her right middle hand, she holds a shield, while in her lower right hand, she holds a bow.

Except for Ganesha, all other idols are depicted with their respective vahanas (vehicles). An eight-armed dancing Ardhanarishvara, a Siva-Parvati, and images of Ganga and Yamuna are also found on the wall of the temple.

There are also images of Vishnu, Indra, Surya, and Yama in the rectangular niches around the base of the porch. A sculpture of Kartikeya riding on his peacock vehicle is present on the southern wall.

Other noteworthy carvings are those of Shiva subduing the demon-king Ravana, who is seen trying to uproot Mount Kailasa, the abode of Shiva. Shiva is sculpted as Nataraja in various tandavas (dance poses) in the temple.

Parashurameshvara Temple has a vimana, the sanctum, and a bada, the curvilinear spire over its roof, rising to a height of 40.25 ft (12.27 m). It is the first temple to have an additional structure called jagamohana, compared to the earlier temples that had only the vimana. 

Though the temple is dedicated to Shiva, it contains sculpted images of Shakta deities, which are otherwise normally part of Shakta temples.