In the 8th century, the lhakhang was initially founded by Guru Rinpoche. The lhakhang is said to be built on the left eye of ‘Dikparaza’ who was subdued by Guru and exiled from Tharpaling at the present location where it stands today. It is believed that the right eye of Dikparaza is located above Jampa Lhakhang. However, in contrast to KMT (2013), it is said to be built on the head of ‘Dikparaza’ (Scorpion).

 Later, in the 11th century, the lhakhang was reconstructed by Lama Ngogten Choku Dorje who was one of the four main students of Marpa. According to elders, the walls of the lhakhang are said to build by dakinis. The juniper  tree in front of the lhakhang is considered a walking stick of Palden Lhamo (Mahakali). The statue of Palden Lhamo was brought three years ago by one of the monks from Trongsa Dratshang who is from Norgang village.

 Later, in the 20th century one of the Tshampa who resided at Kolay Goenpa appealed to the Royal Grandmother  for the renovation of the lhakhang when Guru Lhakhang at Kurje was being renovated under the command of Royal Grandmother Ashi Kezang Choden Wangchuck.. The replacement of the timber components of lhakhang was approved and was renovated subsequently. However, there are no references or written documents about the lhakhang but elders claim that some of the written documents are available at Tharpaling lhakhang.