Ryujin Onsen was founded by Kobo Daishi (774-835), the founder of the Shingon school of Buddhism, who received an oracle during a dream from the Dragon King water god, which revealed the location of the hot spring waters. Here he built a small thatched hut hermitage and enshrined a statue of Yakushi Nyorai, the medicine Buddha. Later, a monk named Myozan was miraculously cured from a skin disease after bathing here. In gratitude he rebuilt the hut and named it Onsen-ji Temple.
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