Chintaamani Narasimha
The Bhaviṣyottara Purāṇa states that Prahlāda consecrated Lord Narasimha in this temple. The Purāṇa also mentions that Lord Kṛṣṇa informed Yudhiṣṭhira about the greatness of this place.
Prahlāda, the son of Hiraṇyakaśipu, rules the kingdom with happiness and contentment. Once, he desired to take Mahāmantropadeśa, do a purascaraṇa and please Lord Viṣṇu. He visits the āśrama of Gālava Ṛṣi. He was welcomed, given a seat and asked why he came to the āśrama. Prahlāda expresses his longing to receive the mantra that will lead him to Viṣṇu's abode (Viṣṇu-pada). The Ṛṣi then imparts the thirty-two syllable mantra. The Ṛṣi of the mantra is Prajāpati, it is Gāyatri Chandas, Devata is Śrī Lakṣmī Narasimha. He further explained that by doing purascaraṇa of this mantra near Tuṅgabhadrā Saṅgama, which has Brahma Tīrtha, Viṣṇu Tīrtha and other divya Tīrthas, he would swiftly gain siddhi.
Prahlāda, guided by the Gālava Ṛṣi, arrives at Yamalapuri Kṣetra (Kūdali), the confluence of the Tuṅgabhadrā river. Here he takes a bath (sacaila-snāna) and gives pitritarpaṇa and worships the devatas. Then Prahlāda sits reciting the Śrī Lakṣmīnarasimha mūla-mantra which was given as dīksha by Gālava Ṛṣi. After some time Śrī Narasimha appeared in the water in the form of Śālagrāma Śila.
Prahlāda brought the śila out of the water, placed it at a spot and worshipped it. Taken in by Prahlāda's devotion, Narasimha emerged from the Śālagrāma Śila, appearing in his true form, and offered him a boon. Prahlāda prays, "May I remain your devotee in every birth. Bless this Tuṅgabhadrā Saṅgama Kṣetra to always have your presence, bringing blessings to all. Grant liberation to those who remember you, freeing them from the cycle of birth and death, and bestow peace upon them.
Lord Narasimha grants his boon and merges with the Śālagrāma stone. Content with the darśan of Śrī Narasimha, Prahlāda returns to his kingdom with his heart full of joy.
In addition to this Purāṇic reference, there is another popular folk tale. Pleased with Prahlāda's bhakti, Lord Narasimha emerges from the Śalagrāma stone and gives him darśan in His Virāṭ-rūp. At this point, Prahlāda prays, "May you take a form that is worthy of being worshipped by humans, one that reflects your grace." Responding to his prayer, Narasimha instructs him to place his hand on his head. Then Prahlāda raises his right hand. Śrīswāmi takes upon the Kubjāvatāra (smaller form) that sits in Vīrāsana so he fits into space between his palm and earth. Seeing this adorable little form of Narasimha, Prahlāda ecstatically placed his palm on Śrī Narasimha's head. Even today, the scalp of this idol is flat. There is a slightly raised part in the middle. There is a chakra symbol on it. It is said that Prahlāda had a cakra symbol on his palm and that symbol is the mark here on Narasimha's head. That's why another name for this vigraha is called 'Śiraścakra-mūrti'. As a symbol of Prahlāda's promise to fulfil the wishes of the devotees, there is a 'cintāmaṇi' in the right hand of Śrī Mūrti. Narasimha is the presiding deity of this place. That is why Kūdali is also called Śrī Narasimha Kṣetra in Purāṇas.