The legend of the lake is very interesting and romantic. A Prince, Saif ul Malook fell in love with a fairy princess,Badr u Jamal, whom he saw in his dreams. The prince was restless until a Darvaish (holy man) told him where to find her (i.e. by the lake) and that he had to go through a tough exam to be able to marry the fairy because the prince was a human and she was a fairy.Thus the prince marched on his quest for the impossible in the name of love. He waited by the lake where there was no habitation, (there still isn't), no food,nothing.
His long wait of 12 years, finally reaped harvest and one good morning he saw the fairy come to bathe with her maids and friends in the lake. The prince hid her wings as advised by the holy man.The fairy was very tense at not finding her wings. Eventually the prince appeared and told her about his tale of love and long wait,which moved the fairy and they agreed to marry. But there is always a villain. So a Deuo Safaid (the white giant) who was himself in love with the fairy got jealous and furious. In rage the gaint cried and thus tear lake (ansoo jheel, approx. 2 miles away ) was formed.
The giant stepped angrily, the dam broke and the outlet to the lake Saif-ul-Mulook was formed. The prince and the fairy princess fled away in a cave (which still exists and its length is unknown to this day).
The legend says that both the prince and the fairy live in the centre of the lake saifulmulook, and on every full moon night they emerge mounted on a white flying horse, the pagasus, from the centre of the lake.