It is said that the beginning of the formation of the lake which is currently a mainstay tourist attraction in Magetan Regency was formed in an unseen way. The story begins with two people named Kyai Pasir and Nyai Pasir who have been married for years. But not blessed with descendant.

In order to realize their desire to have children, Kyai and Nyai Pasir went to meditate. And asked for help from Sang Hyang Widhi. It turned out that their meditation was granted by Sang Hyang Widhi and a boy named Joko Lelung was born. After getting descendant, Kyai and Nyai Pasir work day and night to make ends meet.

Every day they go to the fields to farm and occasionally go to the forest to hunt. Over time, the two partners felt tired and began to feel insecure, living with constant difficulty. Finally, Kyai and Nyai Pasir performed meditation and asked for help from Sang Hyang Widhi. In order to be given health and a long life.

Due to their persistence, Sang Hyang Widhi also granted the request of the Kyai and Nyai Pasir. But this time Sang Hyang Widhi gave them a requirement. Namely to find and eat eggs near the fields so that his wish will come true.

After successfully finding the eggs, Kyai and Nyai Pasir rushed home and cooked them until they were cooked. Then, they split the egg and immediately ate it for the sake of fulfilling their wish, then they went to the fields.

When they arrived at the field, suddenly the bodies of the Kyai and Nyai Pasir felt very itchy. Until causing wounds all over their bodies. Over time the two of them transformed into a very large dragon snake. After becoming dragons, the body two of them twisted on the sand, giving rise to a basin that emitted very heavy water. Because of the swiftness of the water, it filled the basin they made earlier.

Knowing their supernatural powers, the two couples plan to make a large basin and drown Mount Lawu. However, Joko Lelung, his son, discovered the evil intentions of Kyai and Nyai Pasir. Finally Joko Lelung did meditation and begged Sang Hyang Widhi to bring his parents to life.

Sang Hyang Widhi accepted Joko Lelung's semedi and when his parents were rolling around, they realized that they should stop. Finally, their intention to drown Mount Lawu was canceled, but until now the two couples have just disappeared.

It is said that until now the lake is guarded by two dragons which are the embodiment of Kyai and Nyai Pasir. Meanwhile, the small island located in the lake is guarded by a holy man who rides a white tiger. On the island there are 3 tombs of magic people, namely Syech Mundur, Nyai Ramping, and Joko Lelono. However, the guard and the mysterious figure in the Sarangan Lake never disturbed or appeared.

The icon of the Sarangan Lake is commonly referred to as the Lake to Remmember Monument. This monument is on the north side of the lake or around the T-junction leading to the exit. This monument is in the form of a puppet mountain flanked by 2 (two) dragons. According to the local people's story, the 2 dragons portrayed Kyai Pasir and Nyi Pasir when each of them transformed into 2 dragons which then wriggled in the area which is now the Sarangan Lake.