Saiful Muluk was formed by glacial moraines that blocked the water of the stream passing through the valley. The Kaghan Valley was formed in the greater Pleistocene Period dating back almost 300,000 years when the area was covered with ice. Rising temperatures and receding glaciers left a large depression where glaciers once stood. Melting water collected into the lake.
A fairy tale called Saiful Muluk, written by the Sufi poet Mian Muhammad Bakhsh, talks of the lake. It tells the story of the prince of Persia who fell in love with a fairy princess at the lake. A poet and writer from Balakot], Ahmed Hussain Mujahid, wrote the story of Saiful Muluk in prose depicting the local version. There is also a cave (based on the name of the giant who pursued the prince) at the lake, with glistening pebbles and flowing water. The cave was the hiding place of Prince Saif and the fairy Badr when the giant was trying to find them. Locals say that due to a miracle the giant turned into a statue while searching for them. The cause of some torches and mobile phones not working in the cave is still a mystery.