According to legend, Panauti was founded in 1082B.c. During the Malla period Panauti was a protectorate of King Anantha Malla(1274-1307BC). Later, King Bhupitendra Malla, the king of Bhaktapur, ios said to have given Panauti as a dowry to his sister. A golden scriture dated 1385BC with in the Indreshowr Temple, states that king Hari Shing dev(of the erstwhile Mithila kingdom) founded the town after fleeing from Simrangadh in the Terai. Durring the reign of Ranjit Malla, the last king of Bhaktapur, Panauti came under the rule of 'Bhadgaun'(today Bhaktapur). In 1763,Panauti was annexed to greather Nepal as a result of king Prithvi Narayan Shah's unification drive.
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