The palace was converted into a temple in the middle of the Muromachi period at the behest of Ashikaga Takauji, who wished to use the temple to hold a memorial service for Emperor Go-Daigo. Ashikaga became the "shōgun" in 1338, and Go-Daigo died in Yoshino the following year. Ashikaga opposed the failed Kenmu Restoration, which was started by Emperor Go-Daigo, and the emperor decreed that Ashikaga be hunted down and executed. When his former-friend-turned-enemy died, Ashikaga recommended that Zen monk Musō Soseki construct a temple for his memorial service. It is said that the temple was originally going to be named , Ryakuō being the name of the reign of the emperor of the northern court at that time. However, Ashikaga Takauji's younger brother, Tadayoshi supposedly had a dream about a golden dragon flitting about the Ōi River (also known as the Hozu River), which lies south of the temple, and the temple was instead named Tenryū Shiseizen-ji—the term "Tenryū" literally means "dragon of the sky". In order to raise the funds to build the temple, two trading vessels called Tenryūji-bune were launched in 1342. A ceremony was held on the seventh anniversary of Emperor Daigo II's death in 1345, which functioned as both a celebration of the completion of the temple, and as Daigo's memorial.