It was built by Lalitaditya Muktapida (695-731) of the Karkota dynasty. He moved his capital from Srinagar to Parihaspur. Kalhana mentions the construction of the city in his Book 4 cantos 194-204. Lalitaditya according to Kalhana built his residence and four temples in this area. The temples included one for Vishnu (Muktakeshva) where according to Kalhana the emperor used 84,000 tolas of gold to make the image of Vishnu. In another temple he used as many Palas of silver for the image of Parihaskesana. He also had made a statue of Buddha in copper that according to Kalhana reached up to the sky. The main temple was larger than the famous temple that Lalitaditya built in Martand.