According to one version, the Sudarshana chakra was made by the architect of gods, Vishvakarman.
Viswakarma’s daughter Sanjana was married to Surya, the Sun God. Due to the Sun’s blazing light and heat, she was unable to go near the Sun. She complained to her father about this. Viswakarma took the Sun and made him shine less so that his daughter would be able to hug the Sun. The left over Sun “dust” was collected by Viswakarma and he made three things out of it. The first one was the famous aerial vehicle Pushpaka Vimana, the second being the Trishula (Trident) of Lord Shiva, and the third was the Sudarshana Chakra of Lord Vishnu.
The other version is “Jalandharasura, a rakshasa, who conquered all the worlds finally landed in Kailasa to conquer it. Lord Shiva drew a Chakra by his big toe on the ground and asked the asura to lift it. Jalandhara lifted the chakra and when it reached near his neck it severed his head. Mahavishnu prayed to Lord Shiva for a proper weapon to kill the Asuras thus saving the livelihood of Devas. Vishnu did tapasya and offered 1008 lotus to the Shiva Linga. To test Vishnu’s devotion Mahadeva hide one lotus flower. At the end of his Tapas(pooja) Vishnu found one lotus was missing and without hesitation he offered one of his own eyes and completed the Pooja. Lord Shiva pleased and appeared before him and gave him the Chakra which is called Sudharshana and also gave him the title name as “Tamaraikannan” (lotus eyed).
The chakra comprises 10 million spikes in two rows. One row of spikes moving in the opposite direction to give it a serrated edge.
It was also used to cut the Goddess Sati , consort of Lord Shiva into 52 pieces after she gave up her life in humiliation. It is said that Shiva, in grief, carried around her lifeless body and was inconsolable. The 52 parts of the Goddess’ body were then tossed about in different parts of Bharatvarsha and came to be known as Shakti Peeths.
The Sudarshana Chakra also protected the great king Ambarisha who was about to be cursed by the Rishi Durvasa as Ambarisha was a great devotee of Lord Vishnu.
According to legend, it protects any devotee of God who calls out for Him.