This monastery is located on the northwestern side of the harbour of Mandraki on a 30m high rock and dates from around 1600 AD.
During the Turkish occupation it issued currency for the transactions of the Nissyrians and in 1823 it took part in the General Assembly of Greece.
There are 270 steps that lead up to the holy cave which still contains the miracle-working icon of the Blessed Virgin.
There are two churches; one has been dedicated to the Assumption of the Virgin and the south church is dedicated to St. Haralambos. According to tradition, a local farmer discovered a small cave, around 1400 AD, with an icon of the Virgin Mary inside this cave, near the hot springs of Mandraki on the island of Nissiros. He took this icon to the church of Panagia Potamitisas (the Virgin of the Rivers). The next day, the icon was missing.
They supposed it to be stolen but after a few days it was rediscovered by the locals in a cave on a 30m high rock.
Again they took the icon to the church of Panagia Potamitisas but again the icon went missing and was rediscovered in this same cave on the rocks. This happened three times until the locals decided to transform the cave into a church and leave the icon in its preferred location.
This cave has been called Panagia Spiliani and the monastery is built immediately above this cave. The locals of Nissyros dedicate this icon as the protectress of the island.