Renowned as one of jewels of Orissa, the 10th century (950 AD) Mukteshwar Temple, dedicated to Lord Shiva is situated near Parasurameswara Temple. The temple is a fine example of Kalinga school of temple architecture with beautiful carvings and exquisite sculptural works. The 35 feet (11 meter) high Mukteshwar temple is a sandstone stands within an octagonal compound wall which is festooned with legendary stories from the Panchatantra and sculptural designs of many animals including elephants, lions and monkeys. The carvings in the temple walls and halls show a mixture of artistic styles of Hindu, Jain and Buddhist. 

The jagmohana (porch), adorned with an eight petal lotus carved ceiling, have diamond shaped latticed windows showing enchanting scenes of frolicking monkeys. In front of jagmohana, there is an ornamental arched gateway (termed as Torana) decorated with attractive sculptures, intricate scrolls and charming female figures. Besides Mukteshwar temple, the temple premises comprise of six small shrines having shiva lingams; a large green sacred tank on the eastern side and a huge well (Marichi Kund) in the south west corner. It is believed that, taking a dip in this holy well will cures a person's infertility.

Mukteshwar temple is lined by several small shrines. The most important among them are the Siddheswar Temple and Kedargauri Temple.