Formerly an important junction on the salt route to Tibet, Mandi is the gateway to the Kullu Valley, and the junction where the road branches off along the Kangra Valley towards Dharmasala.

Comprising of the two erstwhile states of Mandi and Suket, Mandi derived it's name Mandi, or `Market' from the Ladhakh traders who passed through it, on their way to Hoshiarpur.
There is another story about Mandi.Here, long ago, the pious rishi, Mandavaya, performed long and severe penance or tapasya on the right bank of the river Beas, near the present town, which, then took his name.

Both stories indicate the age of the beautiful temple town, situated at the bottm of the valley, and with a hot climate, Surronded by hills, clad in pines, there is a large plain which has grain fields and rochards, between Mandi and Sundernagar. Known for its temples, Mandi is the home of a number of beautiful carved stone edifices each with an elaborate shikhara, or spire, among them bhutnath, triloknath, Panchvaktra and Shyamakoli at Tarna hill. Also on the hill is a new temple dedicated to Tarna Devi, overlooking the valley and giving a panoramic view of the whole area.