Long ago, Kerala was ruled by the daemon king, Mahabali. Mahabali was an efficient and popular ruler. He was loved by all. His kingdom stretched the earth, the patalam or the underground, and was threatening the skies. The ruler of the Heaven, Lord Indra got apprehensive of Mahabali's popularity and might, and approached Lord Vishnu for help and advice.

Vishnu came to this mortal world as a (Vamana) Brahmin (this is one of the avatars of Lord Vishnu) and went to Mahabali and asked for 3 steps of land. Mahabali readily agreed. With the first step, Vamana spanned the entire earth, with the next the underground, and there was nowhere to put his third step. Mahabali being true to his word, asked Vamana to keep the third foot on his head, who pushed Mahabali down into patalam. Mahabali requested Vamana to grant him a boon to come and visit his homeland, Kerala at least once a year, and as the legend goes, he comes to visit his people and his land during Onam.

Even now, people sing the a song which goes like this, Maaveli naadu vaneedum kaalam, manusharellarum onnu polle (When Mahabali ruled the land, all people were equal).

The most important things about Onam are the onakkodi, the new dress worn on this day and ona sadhya, a feast which is quite elaborate. During Onam, people create a multi-colored floral decoration on the ground in the front of their home called a pookkalam. Young children are often entrusted with the task of gathering and laying out the flowers in elaborate patterns.