Wayland's Smithy gets its name from Wayland the Smith, a figure from Germanic and Norse legends who appears in literature as far back as the 10th century. In the legend, Wayland is something of a trickster figure.

He is captured by the Swedish king Nithuthr who tortures and brutally disfigures him before forcing him to work for him. However, Wayland eventually gets his revenge by killing the king's sons and then escaping via a flying cloak (or metal wings according to some versions of the legend) that he creates using his smithing skills.

On returning to England, Wayland was shy as a result of his disfigured appearance and so builds himself a smithy in the isolated spot where Wayland's Smithy now stands. Wayland would carry on his trade without ever allowing anyone to see him.

The rather sad post-script to the legend is that the Swedish king's henchmen eventually tracked Wayland down. In the ensuing fight, Wayland managed to kill eight of the Norsemen with his mighty smithing hammer before he was overpowered and killed.

The eight skeletons that were found when Wayland Smithy was excavated in 1919 are believed to be the skeletons of the eight men Wayland killed, but the final resting place of Wayland himself is said to be somewhere out on the Downs.

A popular belief about Wayland's Smithy is that if your horse needs new shoes you can leave your horse, along with a coin as payment, at the Smithy overnight. When you return in the morning your horse will have new shoes and your coin will be gone! This belief was recorded by Francis Wise, underkeeper at the Bodleian Library, in 1738. It is still common to find coins left in nooks and crannies around the entrance stones to this day.

Wayland's Smithy is connected in legend with the nearby Uffington White Horse. Legend says that once every hundred years the White Horse leaves its place on the hill and travels to Wayland's Smithy to receive a new set of horseshoes.