The word Kashmir is an ancient Sanskrit word which literally means Land of Kashyap Rishi. Kashyap Rishi was a Saraswat Brahmin and one of the Saptarshis, who was key in formalizing the ancient Historical Vedic Religion. The Kashmiri Pandits are his descendants and have named the valley after him, in his honour. According to the "Nilmat Puran," the oldest book on Kashmir, in the Satisar, a former lake in the Kashmir Valley meaning "lake of the Goddess Sati," lived a demon called Jalodbhava (meaning "born of water"), who tortured and devoured the people, who lived near mountain slopes. Hearing the suffering of the people, Kashyap, a Saraswat Brahmin, came to the rescue of the people that lived there.

After performing penance for a long time, the saint was blessed, and therefore Lord Vishnu assumed the form of a boar and struck the mountain at Varahamula, boring an opening in it for the water to flow out into the plains below.The lake was drained, the land appeared, and the demon was killed. The saint encouraged people from India to settle in the valley.

As a result of the hero's actions, the people named the valley as "Kashyap-Mar", meaning abode of Kashyap, and "Kashyap-Pura", meaning city of Kashyap, in Sanskrit. The name "Kashmir," in Sanskrit, implies land desiccated from water: "ka" (the water) and shimeera (to desiccate). The ancient Greeks began referring to the region as "Kasperia" and the Chinese pilgrim Hien-Tsang who visited the valley around 631 AD. called it "KaShi-Mi-Lo" ????. In modern times the people of Kashmir have shortened the full Sanskrit name into "Kasheer," which is the colloquial Koshur name of the valley, as noted in Aurel Stein's introduction to the Rajatarangini metrical chronicle.

The "Rajatarangini," a history of Kashmir written by Kalhana in the 12th century, concurs with Nilmat Puran, stating that the valley of Kashmir was formerly a lake. This lake was drained by the great rishi or sage, Kashyap, son of Marichi, son of Brahma, by cutting the gap in the hills at Baramulla (Varaha-mula). Cashmere is a variant spelling of Kashmir, especially within the English language.