Dali legend tells that once an evil monster, the Luocha 罗刹, terrorised the local population, demanding a regular human sacrifice. Guanyin, in the form of an old monk from India, arrives and pledges to assist the Dali people. He befriends a local helper of the Luocha to get in touch with the monster. When Guanyin meets the Luocha, the monster does not recognise Guanyin's powers. Guanyin asks the Luocha for just a piece of land, so that he can pray, a piece of land wide enough to throw his robe and long enough for his dog to make two jumps. Luocha agrees, but Guanyin mistrusts him and asks for a formal pledge. 

After the pledge is finally given, Guanyin then throws his robe all across Erhai, while his dog jumps all the way to Shangguan, thus claiming all the land of Dali as under his protection. The evil Luocha tries to renege on his promise, but Guanyin turns him into a fly and locks him up under this temple.

In the small and simple temple are a couple of murals illustrating this story. Below is a small temple with a statue dedicated to Guanyin Laoye 观音姥爷.