The largest fair of Bikaner, Kapil Muni Fair is named after the Kapil who was a great sage, believed to have done 'tapasya' here for the redemption of mankind. Kapil Muni has been mentioned in Puranas and has been said to descend from Lord Brahma (the creator of the world) himself. Kolayat was originally known as Kapilayatan and is an oasis in an arid area. It has a lake with Banyan trees all around providing shade to its 52 ghats. The Kapil Muni Ghat houses a temple with a marble statue of Kapil Muni.

It is said that a holy dip in the Kolayat Lake at Kartik Punima redeems oneself. People from different communities float lighted lamps in the holy lake as a part of the rituals, which looks very beautiful and offer coconut, 'batasha' (sugar drops), dry fruits, 'mishri' (sugar cubes) and cash at the temples. They also sing songs in the praise of Kapil Muni. The lakeside is studded with temples, and the Ghats are named after these temples. Some ghats are meant only for women. The pilgrimage to Kolayat is said to be worth 10 years spent at any other sacred place.

A cattle fair is also organized where buffaloes, camels and horses and cattle are traded and certificates and prizes are awarded to the best breeders at the fair.