Principal photography commenced in June 2016 in Hyderabad, and the film was released on 26 January 2018 in Telugu and Tamil along with a dubbed Malayalam version.

[7] In Hyderabad, Home Minister Eshwar Prasad vows to resign from his post if the government fails to recover idols that were stolen over a period of six months.

This troubles his political rivals, who forge a plan to destroy his credibility with the help of CBI Joint Director Vaishnavi Natarajan and ACP Sampath.

The two plan to interrogate DC and Eshwar's close confidate Chanchala Reddy, who is in jail for murdering her husband Shakthi, Sampath's brother.

Vaishnavi interrogates Chanchala to get some clues against Eshwar, but she repeats that they are doubting his integrity without any proof in a cryptic but leading manner.

The CBI team calls upon a psychiatrist to investigating the matter, who concludes that Chanchala must be schizophrenic as she seems to take on a different persona and narrate some story from a book as if it were her own.

Meanwhile, Vaishnavi realizes that Chanchala was trying to convey the truth of Eshwar's crimes using the story of Queen Bhaagamathie, which she came across from the various writings and artifacts that she had discovered in the bungalow.

G. Ashok, who had previously worked on Pilla Zamindar (2011) and Sukumarudu (2013), readied the Bhaagamathie script in 2012 and had written it keeping Anushka Shetty in mind.

In late 2012, the team approached Anushka, and the actress liked the script but was not able to immediately commit to the film, as she had pending projects such as Baahubali: The Beginning (2015) and Rudhramadevi (2015), where she also played warrior princesses.

The film was later delayed when Anushka chose to star in Lingaa (2014), attempt an ambitious size-shifting role in Size Zero (2015) and complete her portions for Baahubali: The Conclusion (2017).

[10] Once she began working on the film in 2016, she shed 20 kilograms through a rigorous diet plan to portray her character of an IAS Officer.

The song "Mandaara" was released as single from the album of Bhaagamathie on 19 December 2016 on the YouTube page of Mango Music, UV Creations.

[17][18] Firstpost rated the film 3.5/5, stating "Bhaagamathie is an impressive outing for the whole cast and crew, and it's also a reminder for us that there are plenty of ways to narrate a story despite having a dilapidated house, a ghost, a hapless young woman, and a gut-wrenching backstory.

Director and production house have packaged the film in such a way that it partly satisfies the people who look for horror elements and the audiences who seek a thrill.

"[22] Hindustan Times also rated it 3/5 and wrote, "The film draws inspiration from history and adds a dash of supernatural to serve us a crime thriller.