The Bhairavnath Temple stands on the eastern side of Taumadhi Tol. Built under King Jagajjyoti Malla (1614-1637), the temple originally possessed only a single floor, but in 1718 Bhupatindra Malla and his son added two floors, and placed a golden roof on top.

The temple is decicated to Bhairavnath, or Akash Bhairav, the destroyer of demons, who was installed 'for the protection of the country and the removal from sin and distress of the people'.

The Bhairavnath Temple is the focus of the Bisket Jatra, the New Year celebrations in Bhaktapur (13-14 April). Small figures of Bhairavnath and his divine spouse Bhadrakali are carried on separate chariots around town, to finally meet at the Bhairavnath Temple in a riotous celebration. Local lore has it that Bhairavnath, when left to his own devices, can become very mean-spirited, and he is in a much better mood when his wife is around. The figure of the feared Bhairavnath, incidentally, is a mere 30 centimetres high, his equally obnoxious wife only 25.