Another story from the Precious Scroll of Fragrant Mountain () describes an incarnation of Guanyin as the daughter of a cruel king who wanted her to marry a wealthy but uncaring man. The story is usually ascribed to the research of the Buddhist monk Jiang Zhiqi during the 11th century. The story is likely to have its origin in Taoism. When Chiang penned the work, he believed that the Guanyin we know today was actually a princess called Miaoshan (), who had a religious following on Fragrant Mountain. Despite this there are many variants of the story in Chinese mythology.
According to the story, after the king asked his daughter Miaoshan to marry the wealthy man, she told him that she would obey his command, so long as the marriage eased three misfortunes.
The king asked his daughter what were the three misfortunes that the marriage should ease. Miaoshan explained that the first misfortune the marriage should ease was the suffering people endure as they age. The second misfortune it should ease was the suffering people endure when they fall ill. The third misfortune it should ease was the suffering caused by death. If the marriage could not ease any of the above, then she would rather retire to a life of religion forever.
When her father asked who could ease all the above, Miaoshan pointed out that a doctor was able to do all of these. Her father grew angry as he wanted her to marry a person of power and wealth, not a healer. He forced her into hard labour and reduced her food and drink but this did not cause her to yield.
Every day she begged to be able to enter a temple and become a nun instead of marrying. Her father eventually allowed her to work in the temple, but asked the monks to give her the toughest chores in order to discourage her. The monks forced Miaoshan to work all day and all night while others slept in order to finish her work. However, she was such a good person that the animals living around the temple began to help her with her chores. Her father, seeing this, became so frustrated that he attempted to burn down the temple. Miaoshan put out the fire with her bare hands and suffered no burns. Now struck with fear, her father ordered her to be put to death.
In one version of this legend, when Guanyin was executed, a supernatural tiger took her to one of the more hell-like realms of the dead. However, instead of being punished like the other spirits of the dead, Guanyin played music, and flowers blossomed around her. This completely surprised the hell guardian. The story says that Guanyin, by merely being in that Naraka (hell), turned it into a paradise.
A variant of the legend says that Miaoshan allowed herself to die at the hand of the executioner. According to this legend, as the executioner tried to carry out her father's orders, his axe shattered into a thousand pieces. He then tried a sword which likewise shattered. He tried to shoot Miaoshan down with arrows but they all veered off.
Finally in desperation he used his hands. Miaoshan, realising the fate that the executioner would meet at her father's hand should she fail to let herself die, forgave the executioner for attempting to kill her. It is said that she voluntarily took on the massive karmic guilt the executioner generated for killing her, thus leaving him guiltless. It is because of this that she descended into the Hell-like realms. While there, she witnessed first-hand the suffering and horrors that the beings there must endure, and was overwhelmed with grief. Filled with compassion, she released all the good karma she had accumulated through her many lifetimes, thus freeing many suffering souls back into Heaven and Earth. In the process, that Hell-like realm became a paradise. It is said that Yama, the ruler of hell, sent her back to Earth to prevent the utter destruction of his realm, and that upon her return she appeared on Fragrant Mountain.
Another tale says that Miaoshan never died, but was in fact transported by a supernatural tiger, believed to be the Deity of the Place, to Fragrant Mountain.
The legend of Miaoshan usually ends with Miaozhuangyan, Miaoshan's father, falling ill with jaundice. No physician was able to cure him. Then a monk appeared saying that the jaundice could be cured by making a medicine out of the arm and eye of one without anger. The monk further suggested that such a person could be found on Fragrant Mountain. When asked, Miaoshan willingly offered up her eyes and arms. Miaozhuangyan was cured of his illness and went to the Fragrant Mountain to give thanks to the person. When he discovered that his own daughter had made the sacrifice, he begged for forgiveness. The story concludes with Miaoshan being transformed into the Thousand Armed Guanyin, and the king, queen and her two sisters building a temple on the mountain for her. She began her journey to a pure land and was about to cross over into heaven when she heard a cry of suffering from the world below. She turned around and saw the massive suffering endured by the people of the world. Filled with compassion, she returned to Earth, vowing never to leave till such time as all suffering has ended.
After her return to Earth, Guanyin was said to have stayed for a few years on the island of Mount Putuo where she practised meditation and helped the sailors and fishermen who got stranded. Guanyin is frequently worshipped as patron of sailors and fishermen due to this. She is said to frequently becalm the sea when boats are threatened with rocks. After some decades Guanyin returned to Fragrant Mountain to continue her meditation.