Mahanandi nestled in the Nallamalla hills, is famous for it's massive Nandi. The Mahanandisvara temple is one of Nava Nandis, the 9 Nandi temples located in a radius of around 15 km, which are around 1500 years old. The 9 Nandi temples are Mahanandi, Sivanandi, Vinayakanandi, Somanandi, Prathamanandi, Garudanandi, Suryanandi, Krishnanandi (also called Vishnunandi) and Naganandi.
All these 9 Nandi temples are located in the vicinity of Nandyala, with Mahanandi being around 21 km from it. The town gets it's name from Nandi Alaya, meaning the abode of Nandi. Again Mahanandi is very famous for it's Pushkarinis, while two of them lie outside the temple, the largest one lies inside the temple, which is about 60 sq ft, and has a Mandapam in the center. The water to these Pushkarinis, comes from the Garbagruha just below the Swayambhu Shiva Linga. And it's always fresh and pure. Again like in Yaganti, the water here never runs out even in the peak of summer.
The Pushkarinis at Yaganti and Mahanandi are an engineering marvel, considering they are in a region which has very less rainfall, is usually hot and dry, yet they always have a steady flow of fresh water, even at the height of summer. The water in the Mahanandi Pushkarini is famous for it's medicinal properties too. And this water is also used to irrigate the fields around the temple growing vegetables, rice.
As per the Sthala Purana, there was a Rishi named Sillada living in the Nallamalas, a devotee of Shiva. Pleased with his penace, Shiva appeared before him, and asked him what boon he wished for. When Sillada, requested Shiva to be with him always, he blessed the couple with a male child. They named him Mahanada, who like his father was an equally ardent devotee of Shiva, and did penace to him.
When Shiva appeared before Mahananda, the lad asked for the boon to serve as his vahana. Shiva blessed him, saying that this place will be a holy Kshetra in your name, and you shall serve me as my vahana, as well as my close confidante.
Another Sthala Purana says that there was a king called Nanda ruling from there. One day some cowherds came to his court and told him about one of their cows going to an ant hole and a child coming out and drinking the milk. When the king went to the forest and observed the sight, he went closer, however the frightened cow ran away. That night Shiva appeared to him in a dream saying "I was the boy in that ant hole, build a temple there for me, as also the 9 Nandi temples"
When the king went to the hole and dug it up, he found a Swayambhu Shiva Linga there. He also dug the 3 ponds or Pushkarinis, the largest one in the temple is the Rudra Gundam, the other two are Brahma and Vishnu Gundam.