This temple was built by Raja Jagat Singh to house the statue of Lord Ragunath-Lord Rama. The main tourist attraction of Kullu is the Raghunath Temple, dedicated to Lord Ram, who is one of the principal deities of the Hindu religious pantheon. The temple is located on a hill overlooking the city.
Legend : Raja Jagat Singh originally brought the Rama Deity in this temple from Ayodhya in 1651. The king was advised by a priest to bring the deity to this place, as penance to get rid of a curse for causing the death of a local Brahmin, that was turning his food into worms. There is an interesting legend connected with the idol of Raghunathji.
It says that Raja Jagat Singh of Kullu, who had been informed that a Patha of pearls was in the possession of one Brahmin named Durga Dutt of village Tipri, directed his men to fetch the pearls from the Brahmin. He was greatly harassed by the Raja's men finding the torture rather unbearable, he told them that the pearls would be delivered to the Raja on the return to the village from Manikaran where he was going.
When the Raja arrived at the village, the Brahmin locked his family and set fire to the house. The entire family was reduced to ashes. The spirit of the innocent Brahmin family thereafter haunted the Raja.
Soon he noticed crawling worms in place of rice and human blood in place of water in the tumbler. Thereafter He went to a renowned Bairag saing, Shri Kishan Dass ji paihari, who lived at Naggar. The Raja sought advise to expiate for the wrong done. The saint advised him to embrace Vaishnava dharma and to enthrone the image of Raghunathji, which at that time, was lying in a temple at Ayodhya.
Shri Damodar Dass, a disciple of the Bairagi, was deputed for this purpose. The idol was installed at Raghunathji's temple at Sultanpur and the Raja voluntarily donated his entire kingdom to Raghunathji. It is the most important temple in the area.