The antique temple of sri Vaikuntha Perumal is associated with celebrated legends, which has endowed it with a majestic grandeur. However the legends are mainly connected with the principal deity of this temple. According to one of these legendary stories, a farmer of the village promised Vaikunthavasa Perumal to give Him a large share of the grain from his land. Eventually he was rewarded with a bountiful yield that year but the farmer decided to take it home instead of giving it to the God. The rice grains which were heaped like a hill suddenly changed to a hill of stone. The repentant farmer came to understand about his mistake and fell at the feet of the God. God accepted his apology and took a single rice grain in His two fingers and gave back the rest to His devotee, the farmer. Following this legendary story, the presiding deity in this temple is still seen holding a rice grain in His left hand. It is believed that Nemili is the corrupted form of the word Nelmalai or hill of grains.

Apart from this, another interesting legend is connected with this temple which is similar to the famous one associated with the Eri Katha Rama temple at Madhuranthakam. The common belief in Nemili runs that during heavy rains, the irrigation tank in the village started to overflow. The villagers, who were scared that the tank might breach and flood their houses and land prayed fervently to the Lord to prevent this calamity. Lord was satisfied with their ardent prayers and in answer to their sincere prayers He prevented the breaching of the tank with His back.

The temple houses Lord Vaikuntha Perumal as the principal deity following the stories of Legends associated with it.