The exact origins of the Mahakaleshwar Temple are uncertain, but it is believed to have existed since the prehistoric period. According to Puranas, it was initially established by Prajapita Brahma. Historical references mention the temple's appointment of Prince Kumarasena in the 6th century BC to maintain law and order. Coins from the 4th-3rd century BC depict Lord Shiva, indicating the temple's significance. Throughout various dynasties, including the Paramaras, the temple remained a focal point of devotion and underwent reconstruction. In the 18th century AD, the temple was rebuilt by Sukhatanakar Ramchandra Baba Shenavi during the Maratha rule in Ujjain.

It is believed that the Shivling in this temple is Swayambhu, which is self-born. According to belief, Mahakal appeared here to end the demon named Dushan. It is said that since the time of Vikramaditya, no king or minister used to pass near this temple at night. There is also such a belief that by taking the ashes offered on Jyotirlinga in the form of Prasad, one gets freedom from diseases and defects.

The Mahakaleshwar Temple is a three-story structure with separate lingams of Mahakaleshwar, Omkareshwar, and Nagchandreshwar installed on each level. The temple complex features a large Kunda called Koti Tirtha, showcasing the sculptural grandeur of the Paramara period. The lingam of Mahakaleshwar is colossal, adorned with a silver-plated Naga Jaladhari and a roof covered in inscribed silver plates. The garbhagriha houses small-sized images of Ganesha, Kartikeya, and Parvati, and the walls are decorated with classical eulogies. The temple exhibits a blend of Bhumija, Chalukya, and Maratha architectural styles, with distinctive sikhara and mini-srngas. The temple complex has undergone repairs and renovations, and special religious occasions like Mahashivratri and Somavati Amavasya are celebrated with fervor.

Devotees present dhatura, bel patra leaves, milk, rose water, flowers, and besan laddoo as offerings to Lord Mahadev in the temple.