The legend goes as follows…..
Lord Parasurama once travelling through the western coast of India, incidentally reached the place where the temple is presently situated. As usual he stepped into the lake for 'Sandhyavandana' during sunset .Then he saw a bright light at a distance. Curiosity to know about the source of light prompted him to walk forward toward the center of the lake. Suddenly divine knowledge came to him that the origin of the light is 'Sapthamathrukkal' who were travelling through the lake on the top of the tortoise.
Meanwhile the tortoise had become unable to travel as the water had paved way for Lord Parasurama who was moving towards the centre of the lake. The place where the tortoise became standstill came to be known as 'Amaninnayidam' and later on become 'Ameda'. Since his spurt of movement towards the centre of the lake caused the stillness of the tortoise and thereby the stoppage of the journey of the 'Sapthamathrukkal', Lord Parasurama decided to construct a magnificent temple at the same place where the tortoise stopped its travel. And hence the Ameda temple came into its being at its present position.