Karavaloor can also be written as Karavalur. The name is derived from the legend of Shri Peedika Bhagavathy, the Goddess of Karavaloor, who appeared to the village with a Karaval after she was called for their protection. The suffix Uru is Proto-Dravidian for "village". It was once part of the Venad Kingdoms which laid the foundation for the later Chera kingdom. It developed trade links with Kollam Port and traded in spices and herbs as was common in the period.

Karavaloor features the Karavaloor Peedika Bhagavathy Goddess Temple, where Bhadrakali is the presiding deity. The annual festival of this temple is known for its processions. Active temples include Padinjattinkara Shiva Temple, Paanayam Shiva Temple, Mathra Shiva Temple, and Murikolilkavu Parvathy Temple. They are worship sites, along with almost a dozen sacred groves that denote nature. Churches are present, such as Karavaloor Bethel Marthoma Church (attracting more than 500 families), Kereeth Marthoma Church, St. Benedict Malankara Syrian Catholic Church, St. George Orthodox Church and Nithya Sahaya Matha Church. Pentecostal churches include Assemblies of God churches, Church of God and many Independent Pentecostal churches.