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This temple is one among the 51 Shakti peethas located on the Indian subcontinent and is a location where one of Sati's limbs, her right arm, is considered to have fallen when grief-stricken and agitated Shiva was carrying her dead body round the world on his shoulders, and Vishnu had cut her body into pieces with his Sudarshana Chakra. The story behind this event is that King Prajapati Daksha, father of Sati (the incarnation of Goddess Parvati, wife of Lord Shiva), was performing a yagna (yagna is defined as a Hindu fire ritual sacrifice when deities of the Vedic times like Agni, the fire god, and others were invoked by offering oblations such as ghee (clarified butter), milk, grains and so forth) called as Brihaspatirityadi. Sati (also called Shakti), Lord Shiva's wife, attended the function without invitation. Daksha, who was not fond of his son-in-law, considered him a mendicant, purposely did not invite him for the yagna, while he invited all other gods. Sati felt deeply insulted by the slight shown by her father towards her husband, whom she had married out of deep love. Even then, she decided to attend the yagna uninvited by her own father. When she went there, her father compounded the insult by totally ignoring her presence and vilifying Shiva. Sati felt deeply humiliated and hurt, and then in frustration, she jumped into the yagna fire and committed suicide. When this news was conveyed to Shiva, first he sent his assistant to the site to enquire and take revenge. Shiva also came to the yagna site and created a furor. In a state of grief and anger, he put Sati's dead body on his shoulders and started wandering around the universe. Looking at this grave situation, Brahma and Vishnu decided to intervene and bring Shiva back to his normal self. It was then decided that Vishnu will follow behind Shiva, and with his, Sudarsha Chakra cut Sati's dead body into pieces. Thus Vishnu cut her into 51 pieces (108 pieces are also mentioned in many Puranic texts) as Shiva traveled worldwide. These fifty-one body parts of Sati fell at different locations in the subcontinent. All these places came to be known as Shakthi Peethas (abode of goddess Shakthi or Durga). Her right arm fell on the Saptashrungi hills, and the place became holy, and a Shakthi Peeth came to be established here.

It is also said that when the demon king Mahishasura was creating havoc in the forests, the devatas and people urged Durga to kill the demon. Then the 18 armed Saptashrungi Devi took Durga and slew Mahishasura, and since then, she is also known as Mahishasura Mardini. Mahishasura was in the form of a buffalo. At the foot of the hill, from where one starts climbing the steps, there is the head of a buffalo, made in stone, which is believed to be of demon Mahishasura.

In the epic Ramayana war, when Lakshmana was lying unconscious in the war field, Hanuman came to Saptashrungi hills searching for medicinal herbs to restore his life.

Saptashrung mountain was a part of the forest called Dandakaranya mentioned in the Ramayana. It is mentioned that Lord Rama, along with Seeta, and Lakshmana had come to these hills to pray to the goddess and seek her blessings.

In the hill of Markandeye, named after Sage Markandeya, there is a cave that is said to have been the abode of the sage. This hill is located to the east of Saptashringi, and a deep ravine divides the two hills. While staying in this cave, Markandeya is believed to have recited Puranas (Hindu scriptures) to entertain the Devi.

Another local myth is that a tiger resides in the garbagriaha (sanctum sanctorum) every night and keeps a watch on the temple but goes away before sunrise.

Yet another myth is that when a person was trying to destroy a beehive, the Devi appeared before him to prevent the act.

Many other recent narratives are extolling the goddess's divinity, which is also linked to Shirdi Sai Baba and his devotees. In one such narration, a priest of Vani village known as Kakaji Vaidya, who was working in the Saptashrungi Temple, was quite disturbed by the miseries of life around him, and he, therefore, appealed to the goddess to give him peace of mind and relieve him from all worries. Pleased with the priest's devotion to her, the goddess appeared to him in a dream and told him to go to the Baba to set his mind at rest and in peace. As the priest was then not aware of which Baba she meant, he thought it was the Shiva at Trimabakeshwar temple, and so he went there and offered worship to Shiva and stayed there for a few days. In the process, he still did not get the feeling of peace, and his restless mood continued. He came back to Vani village disheartened. Every day after taking a bath in the morning, he offered prayers to Shiva Linga by reciting the Rudra mantra from the Yajurveda for many days. He still did not get peace of mind. He then went back to the Mata temple and appealed to her to relieve his restless mind. That night she appeared in his dream and told him that the Baba she meant was Sai Samarth of Shirdi and that he should go there. The priest did not know the whereabouts of Sai Baba. Sai Baba, through his divine psychic perception, realized the need of the priest, and so he sent his most loving devotee Madhavarao to meet the priest and bring him to his presence. Coincidentally, Madhavrao had also gone there at Baba's advice to offer two silver breasts to the goddess. His mother had forgotten to fulfill her vow of gifting the silver breasts to the goddess. When Madhavarao went to Vani village, the priest met him and realized that he had come from Shirdi to offer the silver breast to the goddess. The priest was very pleased and also, for the first time, felt the peace of mind. He then took Madhavarao to the temple where the silver breasts were placed at the goddess's feet in the sanctum to fulfill his mother's vow. The priest then came to Shirdi with Madhavarao and had the Sai Baba's darshan and stayed there for 12 days and felt very peaceful. He then returned to Vani.