Dhanteras falls on the thirteenth day of the ashwin month and two days before the festival of Diwali. The word 'Dhan' signifies wealth and hence this particular day of all the five days of Diwali celebrations is considered to be of utmost importance for the rich mercantile community of India particularly in the western part of India. This day of Dhanteras is meant to be the day of renovating and decorating of the houses and the business premises. Traditional motifs of Rangoli designs are particularly used for decorating the entrance of the homes in order to welcome the Goddess Lakshmi, the goddess of wealth and prosperity.
To signify the arrival of Goddess Lakshmi into the house, small footprints prepared with rice flour and Vermillion powder are made in the entire house. This day is also regarded to be auspicious for women to buy some gold or silver or some utensil. Buying some dhan or some form of precious metal on Dhanteras is regarded to be a sign of good luck. In the evening 'Lakshmi Puja' is performed and diyas are lighted to drive away the shadows of the evil spirit.

According to the most famous legend associated with Dhanteras is that of Samundramanthan, the name given to the churning of the ocean by gods and demons for getting amrit or nectar from the ocean. The result of churning was the arrival of Dhanavantri, the physician of the gods along with the jar of elixir. Since then the day came to be celebrated as the day of Dhanteras.

Another legend associated with Dhanteras is that of sixteen-year-old son of King Hima who was doomed to die by snakebite on the fourth day of his marriage as per his horoscope. On the fourth day of his marriage the prince was not allowed to go to sleep by his young wife, who laid ornaments and lots of gold and silver in a heap at the entrance of her husband's boudoir and lighted thousands of lamps all over the palace and went on telling stories and songs to her husband for the entire night.

Yam, the God of death arrived in the night only to be blinded with the light of the lamps. Since he was not able to enter the prince's room, Yam climbed the heap of the ornaments and the gold and sat there for the entire night listening to the stories and songs and in the morning quietly went away. Since that day Dhanteras came to be celebrated as the day of "Yamadeepdaan" and many lamps are lighted for the entire night in adoration to yam, the God of death.