Originally this place was called Kuduma, it has rich history of over 800 years. The History of this place says that, one day about 800 years ago, angels in the form of human beings came to house of pious people, Barmana Heggade and his family. The couple received the visitors with joy and respect. Impressed with the hospitality and the treatment given by the family, the angels appeared in their dream and promised to stay at Kuduma. They also ordered Barmana Heggade to give donations and food for the needy everyday. As per the wish of the angels Barmana Heggade built temples for Kalarahu, Kalarkai, Kumarswamy and Kanyakumari and performed the rituals and ceremonies from time to time.
Sometime later when Annappa Swamy, the messenger of the angels brought Shivalingam from Kadri in Mangalore, Heggade built a temple of Manjunatha Swamy and installed the Kadri's Shiva Linga there. Henceforth, several ceremonies were held together for Manjunatha Swamy, Chandranatha Swamy and the angels. Kuduma became Dharmasthala, the place where Dharma is a way of life.
The small town of Dharmasthala of Karnataka has more than 25 educational institutions. The ancient manuscripts and paintings retrieved from the archaeological site of the neighboring region of Dharmasthala are well preserved in a museum. The museum of Dharmasthala of Karnataka is a treasure house of antique object. The car museum of Dharmasthala has a rare collection of vintage cars. The ‘Sarva Dharma Sammelan’ is held every year in Dharmasthala at Karnataka and attracts a large number of spiritual leaders to the meet.