Dadhichi was the son of the sage Atharva. Once, Devaraj Indra had sworn that he would behead anybody who dared to preach Brahmavidya to Ashwinikumaras. Ashwinikumaras were the Vaidyas (physicians) hence, Indra used to see them with humiliation and regarded them as inferior. Ahwinikumaras, however had prayed to sage Dadhichi to preach them Brahmavidya. As it was irreligious not to preach someone provided that he was really curious and willing to learn. So, sage Dadhichi agreed to preach them. Then Ashwinikumaras cut his head and kept it aside and fixed a horse's head on his torso. Thus with a horse's head sage Dadhichi preached them Brahmavidya. When Devaraj Indra came to know about it, he beheaded Dadhichi with his sword. Ashwinikumaras then refixed Dadhichi's original head on his torso. Having preached Ashwinikumaras with a horse's head, the sage is also known as Ashvashira (One having a horse's head).

Later on, a deadly demon named Vritrasur appeared from the altar of sage Tvashta. As soon as the demon appeared, he captured the heaven. He appeared invincible for he also swallowed the weapons that Indra and other gods attacked him with. Thus, the unarmed and frightened gods went straight to Lord Brahma. Brahma then prayed to Lord Vishnu. Hearing his prayers, Lord Vishnu appeared before Brahma and said: "Because of his severe penance, the bones of sage Dadhichi have become extremely hard and potent. If a Vajra (a blunt weapon having combined features of a sword, spear and mace) is made of Dadhichi's bones, only then Indra could kill Vitrasur with that weapon. But sage Dadhchi is a dedicated devotee of mine, hence nobody can kill him forcibly. You can go to him and beg for his bones".

Sage Dadhichi then used to live in his hermitage at the confluence of Sabarmati and Chandrabhaga rivers. All the gods reached his hermitage and intimating the purpose of their coming, they prayed to the sage for his bones. Sage Dadhichi then told the gods of his desire to perform a pilgrimage. Devaraja Indra then invoked all the pilgrimage places at Namisharanya. Taking holy dips in all those holy places, sage Dadhichi took a meditating position on his seat. Thus, the sage did not feel any hitch to give up his life for Indra who had once wished to behead him for a petty reason. The sage had no attachment for his ephimeral body. He felt that one day it has to be left. Hence nothing would be more fruitful if that body is given up for a pious cause, benefiting someone. Thus, the sage concentrated his mind in God. Slowly, he began to concentrate on his breath and finally he annihilated into the supreme power. Very soon wild animals devoured his flesh and skin. Indra collected his bones and handed them to Vishwakarma. Vishwakarma made a Vajra from these bones. Using that Vajra then Indra killed the demon Vitrasur. Thus, by the supreme sacrifice of a hermit, Devaloka (the abode of the Devas) could be saved from the onslaught of the demon Vritrasur.