Rewalsar Lake is square in shape having a shoreline measuring 735 m. This lake has dense vegetation in its surrounding. This lake has got certain legends attached to it. According to one legend, this lake was founded when king Arshadhara of Zahor punished saint Padmasambhava and his own daughter. The saint was said to be burnt alive in an isolated place.

A smoke cover surrounded the place for about a week. Being surprised by this unusual event, the king came to the place himself. He was taken aback to find a lake at the location. Realizing his mistake, the king apologized to saint Padmasambhava and married his daughter to him. Since then, Rewalsar Lake has become a religious place for Buddhists. The Hindus too hold this lake sacred based on their own beliefs.