The temple is believed to have been first built around 700 CE under the Chalukya dynasty. The Chalukya king Karandev is traditionally credited with its construction in 634 CE. Over subsequent centuries, the temple received patronage from the Shilahara dynasty (who built the Mahasaraswati shrine), the Yadava dynasty of Devagiri (who built the Mahadwar and offered jewels), and the Maratha Empire. Chhatrapati Shivaji Maharaj and his son Sambhaji Maharaj regularly visited the temple.
The Yadava king Tolum constructed the main gateway (Mahadwar) in 1218 CE. For a period in the medieval era, the temple fell out of worship and the image of the goddess was housed elsewhere. Worship was restored in 1715 under Maratha rule. The Garuda Mandap, with its characteristic Maratha wooden architecture featuring square pillars and foliated arches, dates to the 18th century.
The temple's three shikharas (spires) of brick and mortar date from the 19th century. The image of Mahalakshmi has undergone periodic repairs — after centuries of abhishekams caused wear, the Shankaracharya of Sankeshwar had it repaired using the ancient Vajralepa technique. It was reinstalled by Shahajiraje of Kolhapur in 1954.
The temple was also associated with Jain traditions at certain points — the Sheshashayee Vishnu shrine near the eastern gate has a panel of 60 Jain Tirthankara carvings, indicating the temple's long multi-faith history.
