After coming back from China, Kūkai started establishing the Shingon school in Japan. He first became abbot of Todaiji-temple in Nara. After finishing the Tōji-temple in Kyoto, he became abbot there. Kūkai is also known as the first philosopher of Japan. As much as he was skilled in Buddhist philosophy, he was convinced that only regular practice will help us to understand our mind as it is. Therefore he always had a plan for a peaceful remote place for meditation practice in mind. Finally in 815 he got granted the area of Koyasan by the emperor Saga to establish there a place for Shingon-practice. Kūkai did all the planning and the basic layout of the Daijo Garan. Kūkai has been choosing Kōyasan, because of the 8 peaks surrounding the plateau like a lotus flower, presenting the Taizo or Matrix Mandala. He called it Kongōbuji, Daimond-Peak-Temple, representing the Kongōkai Mandala. In the middle of it he planned the big stupa, Daitō, with Dainichi Nyōrai as a representation of the cosmos in the middle. Kōyasan was for Kūkai the perfect place, because it represented the non-duality of both Mandalas. Unfortunatly he felt sick in 831 and passed away in Koyasan in 835 before the project was finished. He is still believed to sit in eternal meditation in a cave at the end of Okonoin, called Gobyō.
The final construction was finished by his successor Shinzei (真済, 800-860).
There are many old legends around Kūkai and many miracles described to him. Hence people venerate him as Daishi Sama, probably the only holy master in Japan.
While Kūkai was standing on the shore of China, before his return back to Japan. He was throwing a three-pronged-vajra in the direction of Japan, promising himself, that he will establish a place for practice at that place, where he will find this vajra again.
Years later he was led by a hunter with two accompanying dogs, one white, one black, to the place called Koyasan. The hunter showed him the vajra in the middle of a tree. This tree is still there in front of Mijedo and many people are collecting the needles of this tree to bring home the Vajra to their homes.
Over the time Koyasan has developed as an endpoint for several pilgrimages. The most famous one is the 88-temple pilgrimage around the island of Shikoku dedicated to Kūkai Kobō Daishi. The pilgrim wears a white west, symbolizing giving up of life during this time. On the back is written "dōgyō ni-nin" - 同行二人, two people practice together. It means that Kūkai Kobō Daishi always walks together with the pilgrim. On the end the pilgrim reports to Kūkai Kobō Daishi at Gobyō. Another well known pilgrimage is the 33-temple pilgrimage dedicated to Kannon, Avalokiteśvara. The third one is the Kumanokodo, leading up from the cost to Koyasan.
Temples in Koyasan started hosting pilgrims. Hence the Shukubo system developed. Until the Meji restoration women were not allowed to enter Koyasan. Meanwhile there is a special training temple for women in Koyasan and anybody can stay overnight at one of the temples, like ours.Today Koyasan is a UNESCO world cultural heritage with more than 150 temples.