The place Taudaha takes its name from the lake Ta daha situated here from the time immemorial which also holds the ancient history of Kathmandu valley long before the settlement of human society. It is believed that the valley, now established as the capital of the nation, was a big lake until the period in which the mythical history of Nepal begins. At this time, it is believed lord Manjushree cut off the mountain peak at Chobhar by forming a gorge to evacuate the water form the lake, making it suitable for habitation and eventually the human civilization is believed to set up in the valley.

In the process of evacuating the water from the lake, the king of serpents Karkotak and his wife who were residing in the lake was about to be carried along the rapid flow of the water. It caused a terror among the gods: if he was carried out from the valley it would lead to misfortune within the valley. Ultimately the gods requested him to stay within the valley by forming a lake today known as Taudaha, the name Taudaha is composed of the words Ta and Daha from Newari language wherein Ta stands for snakes and Daha means lake.

Another interesting part of the mythical history of Taudaha is that while making the arrangement for king of serpents, the gods requested Bhimsen to excavate the land to construct a lake. The soil and mud he excavated to form the lake created a huge mountain at the other side where goddess Champa Devi resides, and the lake became accommodation for the king of serpent, Karkotak.

The local people still hold the notion that Karkotak resides in a big palace inside the lake and it is their moral duty to safeguard him. The king Karkotak is the ultimate authority and he only should grant the permission to carry on any activities in the lake. He is not supposed to be disturbed by any means. This feeling is supported by a story associated with king Karkotak: in ancient times the king used to assist local people and fulfilled all their wishes by providing them the commodities and help they asked from him, and had always taken care of the needs of Taudaha community. Then a greedy farmer who received utensils for a feast from king Karkotak did not return them and kept them for himself. As a result this process of helping people came to an end.

According to a story, demon named Danasur stole away the wealth of Indra, the king of gods and the vast treasure were hidden in the lake of Taudaha under the protection of Karkotak, the king of serpents. It is said that a big cobra has been seen by the local persons at this site nearby the tree though cobra are not found in the valley. This story was given so much importance that once Rana Prime Minister Jung Bahadur Rana took it seriously and he got this lake dragged but it is said that he found nothing.

A further legend is attached to this story, the same demon Danasur wanted to make a pond for his daughter to play in. So he filled up the Chobhar gorge with the result that the Kathmandu valley again became a lake. At this time lord Vishnu one of the Hindu trinity rose to the occasion, he killed Danasur and reopened the sluice.

There is another interesting story about Taudaha lake. Several years ago some farmers encroached upon the lake. The sacrilegious act of the farmers resulted in serious drought in the valley for three years. A lama from Lhasa mentioned that the drought was due to the irreligious act of the farmers. On his advice the adjoining fields were cut off and the lake was restored to its original shape and size. All these stories attached with this holy lake suggest the religious importance of Taudaha and signifies the conservation of biodiversity.