Tradition holds that Genkoji was founded in 747 by Gyoki as an imperial prayer temple of Emperor Shomu, under the name Heijoji. Gyoki, one of the great monks of the Nara period, built bridges, reservoirs, and almshouses as part of his missionary work among the common people, and led fundraising for the Great Buddha of Todaiji. His footprints remain across Settsu, Ikeda, Mino, and Kawachi — and the presence of an early Gyoki foundation in Toyosaki, so close to modern Umeda, speaks to the missionary network that radiated from ancient Naniwa Port northward.

In 1124, Ryonin — founder of the Yuzu Nembutsu sect — restored the dilapidated Heijoji and established it as a temple of his school. Ryonin studied Tendai on Mount Hiei, then retreated to Ohara where he perfected shomyo Buddhist chant. He went on to develop the doctrine that "one person's nembutsu interpenetrates with all, and the nembutsu of all fulfills that of one." His revival of Heijoji made this Toyosaki site an important node in the spread of Yuzu Nembutsu in Settsu Province.

In 1206, on pilgrimage to Shitennoji, Honen lamented the decline of this ancient temple and took charge of its revival. Recalling his own verse — "Seeking the source I come to know this temple: the lamp of the Law whose light shines far" — he renamed it Genkoji ("Temple of the Source of Light") and converted it to the Jodo sect. Honen, founder of Japanese Pure Land Buddhism, had ties to many temples near Shitennoji, but Genkoji holds the rare distinction of being a temple revived and personally renamed by the founder himself — a site of particular significance in Jodo sect history.