The forest of Daruka
Tradition holds that the forest around Aundha was known as Darukavana, where the demon Daruka troubled the people. Lord Shiva appeared in the form of a serpent to defeat him — and so the deity here is worshipped as Nageshwar, the Lord of the Nagas.
The Pandava connection
It is said that the Pandavas established the Shivlinga at Aundha Nagnath during their exile. This is why the temple remains a stop on the pan-India Jyotirlinga circuit for so many families.