The Udupi town and the Krishna temple are closely connected with a Vaishnavite philosopher and saint, Sri Madhvacharya (1238-1317AD), whose school of philosophy is known as 'Dvaita'. It is believed that the idol of Krishna in Udupi was installed by Sri Aladhvacharya and from that day to till today the worship has continued without any break.
There is an interesting story regarding the existence of the temple in Udupi. It is said that the saint Madhva had a divine calling when he was waiting for the arrival of a ship at the coast called Vadabandesvar in Karnataka. This ship started from Dwarka and had bumped into a brutal storm. And, it was turned quiet by Madhva and the ship reached its destination safely. After reaching in the coast, the captain of the ship offered Madhva all the precious items contained in it to show his gratitude. But Madhva refused them and just asked for a huge boulder like thing lying on board. It was taken by the captain at Dwarka to counterbalance the ship. The captain then gifted him that boulder. When Madva broke the boulder, he found the idol of Krishna inside and he was overjoyed. On seeing this, Madhva got delighted so much that he ran all the way to Udupi by carrying the idol, which was 5 kms away from the coast singing the praise of his beloved Lord Krishna. These hymns, which were uttered by him, are known as the 'Dvadasa Stotra'.
Later, this Krishna idol was installed at the northeastern side of the Ananteshwar temple in Udupi. It is believed that this idol was created by none other than Visvakarma, the architect of the gods himself. This temple is not very huge in size but many structures are added in recent days. There is an aperture named the 'Navagraha window' through which the deity in the chamber is watched. This aperture of the temple has nine square holes.
There is another story related to this Krishna temple in Udupi. It is said that once a lower caste devote named Kanakadasa was not allowed to enter the temple and then the Lord Krishna turned around to enable the devotee to worship him. A unique system is practiced in the temple for management of it. There were eight disciples of Madhva, who founded monasteries in the surrounding areas. These priests of the monasteries take the responsibility of taking care of the temple one at a time. In Udupi, almost all activities and festivities are connected with this Krishna temple. The main festival of the Udupi is 'Paryaya', which takes place on 17th or 18th of January on every alternate year. It occurs to mark the change of the temple head and when the successor takes over. A huge festival environment is created in Udupi town during that time and hundreds of people were fed in a public fest.
There are two other temples in Udupi town named the Chandramaulishwar temple and the Ananteshwar temple. The main source of entertainment for the people of Udupi is the popular costumed musical dance-drama called 'Yakshagana'. Few other ways of entertainment include the buffalo race; which is common among the farming community.