Cheraman Perumal, the reigning king of Kerala, with Kodungallur as its capital, once experienced an unusual dream of the new moon being split into two halves at the horizon. His Court astrologers could not give him a satisfactory explanation. Later when a group of Arab traders on their way to Ceylon met the Perumal, he mentioned about his dream. They explained that this could probably be the miracle Prophet performed at Arabia (Holy Qu'ran-54:1-5).

This explanation convinced him and he decided to embrace Islam. His decision to leave for Mecca was kept a secret. He divided his land and assigned various territories to local chieftains to ensure smooth governance. He then left for Mecca, met the prophet and embraced Islam. He spent some years there and while returning home, fell ill and died at Dhufar in Oman. Before his death, he wrote letters to local rulers of Malabar and handed them to his friends. Later, when Malik Bin Dinar and his companions reached Kodungallur, the letters were handed over to the ruling chieftains. They were given permission to construct mosques in different places. The first mosque in India was thus constructed at Kodungallur and Malik Bin Dinar himself was the first Ghazi of this "Cheraman Mosque". After a while he appointed his relative Habib Bin Malik as the Ghazi at Cheraman Mosque and traveled across the length and breadth of Kerala. He established different Mosques in different parts of Kerala. Later, he left for Arabia where he died. It is believed that the old tombs now at Cheraman Mosque belong to Habib Bin Malik and his wife Khumarriah.