Because Khatu Shyamji is synonymous with Lord Krishna, he is worshipped in the same form. He was Ghatotkacha's son, conceived by Bhima through one of his wives, Jagadamba. Barbarika was a courageous warrior even as a child. His mother taught him the art of warfare. Lord Shiva rewarded him with three invincible arrows because he was pleased with his abilities. Later, Agni, the god of Fire, bestowed upon him the bow that would grant him victory over the three worlds.

When Barbarika learned of the bitter battle between the Pandavas and the Kauravas, he desired to take part in it. He promised his mother that he would support the losing team. After touching Jagadamba's feet, he mounted his Blue Horse, armed with three arrows and a bow. Lord Krishna, disguised as a Brahmin, came to a halt in front of Barbarika to test his strength. He even mocked him by claiming he was going to the great battle with only three arrows. Barbarika replied that a single arrow was sufficient to eliminate all of his opponents. He stated that the first arrow is used to mark everything he wishes to destroy. When he used the second arrow, it marked everything he wanted to save. And when the third arrow was released, it would destroy everything that had been marked.

Lord Krishna challenged him to tie all the leaves of the peepal tree he was standing beneath. Barbarika accepted the challenge and began meditating with his eyes closed in order to release his arrow. Then, without Barbarika's knowledge, Krishna plucked one of the tree's leaves and placed it under his foot.

When Barbarika released his first arrow, it marked all of the tree's leaves and eventually began to revolve around Krishna's leg. Krishna, perplexed, inquired of Barbarika as to why the arrow was revolving around his foot. Barbarika explained that there was probably a leaf under his foot and that the arrow was aiming at it. If Krishna did not want to be hurt, Barbarika advised him to move away. Krishna quickly lifted his foot, only to discover that the first arrow had also marked the leaf he had hidden.

When the third arrow was finally released, it collected all of the leaves, including the one hidden beneath Krishna's foot, and tied them all together. Krishna came to the conclusion that the arrows were infallible and blessed. He asked the youngster who he would support in the war. Barbarika stated that he would fight for the weakest side. Lord Krishna realised then that the Kauravas' defeat was unavoidable. Krishna then begged the youth for charity, and Barbarika promised him anything he desired. Lord Krishna immediately demanded his head. Barbarika was taken aback. He asked the Brahmin to reveal his true identity. Lord Krishna then appeared to Barbarika in his Divine form. He explained to Barbarika that the bravest Kshatriya's head had to be sacrificed before the battle. And because he regarded Barbarika as the bravest of the Kshatriya warriors, he had asked for his head in charity.

Barbarika sacrificed his head to Krishna in accordance with the Lord's command. But he also received a boon from Krishna to be known as one of Krishna's many names, Shyam, during the Kaliyug era. Krishna not only granted him the boon, but also declared that by simply saying his name from the bottom of their hearts, Barbarika's devotees would be blessed and all their wishes granted.

The sacrifice of Barbarika took place on the twelfth day of the Shukla Paksha in the month of Phalgun. The youth asked that even though he was laying down his skull, he be allowed to see the battle through to the end, and his wish was granted. The head was placed atop a hill with a view of the battlefield. When the battle was over, the victorious Pandava brothers argued about who was to blame for their victory. Lord Krishna then suggested that because Barbarika's head had witnessed the entire battle, he should be allowed to judge. Lord Krishna, according to Barbarika's head, was responsible for the victory because his advice, presence, and game plan were critical.

It is believed that the head was recovered from the holy pond near the current Khatu Shyamji temple some years after the Battle of Kurukshetra. A dip in this pond heals all ailments and brings good health. Thus, during the fair held in the month of Phalgun, pilgrims from all over flock to the pond to wash away their worldly sins.