The Man-Eater of Malgudi can be interpreted in two primary ways: as an allegory of the battle between good and evil and as an exploration of identity and displacement. When seen as an allegory, the focus is on the relationship between Nataraj, the gentle and passive printer residing in Malgudi, and Vasu, the unusual taxidermist who takes over Nataraj's attic to live and practice his seemingly grim profession. From this perspective, Narayan represents Indian passivity, while Vasu embodies the aggressive forces of modernity that threaten to unsettle Indian society. Vasu indeed disturbs the entire community, intimidating everyone with his abrasive demeanor and antisocial actions. This allegorical interpretation is supported by the mythological elements woven into the story: Vasu is portrayed as a rakshasha, a demon who defies the gods and brings disorder. Specifically, Nataraj's assistant, Sastri, compares Vasu to Bhasmasura, a demon from Hindu mythology who destroys everything he touches, challenges the divine, and causes suffering to ordinary people. However, Bhasmasura's arrogance ultimately leads to his own demise. In the novel, Vasu terrorizes Malgudi, disrupts the lives of its residents, and attempts to interfere with its traditions. In the end, Vasu accidentally kills himself while trying to swat a mosquito on his forehead.

An alternative and distinctly different interpretation of The Man-Eater of Malgudi sees it as a tale of self-identification. In this view, the protagonist-narrator, Nataraj, is jolted from his mundane life by the energetic Vasu. From this angle, Nataraj begins to adopt Vasu's way of thinking and acting, eventually realizing he must confront and eliminate the man who embodies the suppressed, primal facets of his own nature. By the end of the novel, Nataraj transforms into a much more resilient character, successfully outsmarting Vasu and maneuvering him into a position where self-destruction becomes his only option.