It is located at 1100 ft. above surface level of the main city on the Shankaracharya hill. The Shiva temple, as Kalhana believes, was constructed by Raja Gopadatya in 371 B.C. and, as such, is the oldest shrine in Kashmir, though it is not certain if the temple exists in the same form as it had been built more than two thousands years ago.

The first repair of the temple is believed to have been undertaken during the reign of Lalitaditya in the eighth century A.D. According to the historian Shrivara, Zain-ul-Abideen conducted second repairs of the temple after it had been damaged in an earthquake. The third time repair was undertaken during the Governorship of Sheikh Mohi-ud-Din when the temple is believed to have been named as Shankaracharya. Dogra ruler, Maharaja Gulab Singh, constructed stone stairs upto the temple. In 1925, the temple was electrified. The temple, besides a prominent Hindu religious place, is of great archaeological importance. The temple commands a magnificient panoramic view of the Srinagar City.