Located about 12km north of Taulihawa, Sagarhawa is identified as the place where the Sakyas were massacred by the King Virudhaka, the son of Prasenajita Raja of Kosala out of revenge. Later, in the memory of the noble Sakyas, hundreds of stupas were built here by their descendants. Also known as Lumbu Sagar it is 1,059 feet long and 225 feet wide. The ancient ruins, primarily the stupas and monasteries, are situated on the west and south banks of the pond.

Dr. Fuhrer in 1897 AD, on behalf of the Government of Nepal, carried out the first excavation in Sagarahawa and uncovered thousands of small relic stupas arranged in long symmetrical rows on the four sides of the largest square stupa. The Chinese traveler Hiuen Tsang describes his visit to Sagarahawa and presence of several thousands of stupas, indicating the spot where the members of the Sakya clan were slaughtered.