Master Yin Shun was the most influential Buddhist thinker in modern China. His book Zhongguo gudai minzu shenhua yu wenhua zhi yanjiu (A study of China’s ancient mythologies and culture) is rather different from most of his other writings most of which deal with Buddhist thoughts only. However, it can shed some light on the Master's reflections on Buddhism. The purpose of this paper is to understand how the Master appreciated and utilized ancient legends and mythologies in the Buddhist tradition, and how they were received and changed in the course of time. There are seven sections: 1. legends on the biographies of Shakymuni; 2. legends on the compilation of Buddhist scriptures; 3. legends on the compilation of Buddhist scriptures during the first and the second stages; 4. legends on Mahayana Buddhism; 5. legends on King Asoka, on the destruction of dharma, and the staying of the four great Hinayana monks; 6. legends on the mundane world; 7. legends in the history of Chinese Buddhism. The results of the present study are as follows: 1. Yin Shun adopted the view of the Mulasarvastivadha on the issue of legends and mythologies. Abhidharma-the greatest theory of the Mulasarvastivadha-took a critical attitude towards the legends, rather than treating them as facts or truths. 2. Yin Shun's attitude toward Buddhist legends was firmly established as early as in his Fofa gailun (An introduction to Buddhism) in the 1940s. 3. Yin Shun's rational view on Buddhist legends greatly influenced his evaluation of Mahayana Buddhism. 4. Yin Shun was predominantly a rationalist. His rationalism overrides his religious belief. This is inferred from his evaluation of Buddhist legends and mythologies.