Kiratamurti is the form of Lord Shiva where he appears as the hunter in the epic of Mahabharata. The cause behind this form of Kiratamurthi is to present Arjuna the most powerful weapon called Pashupatastra. Lord Shiva grants this weapon to Arjuna, because of the fact that Arjuna needs to accumulate the strength of divine weapons to win over the Kauravas in the War of Mahabharata.
During their period of exile in Mahabharata, the pandavas were facing a lot many hardships. Lord Krishna suggested them that they should utilize the time to accumulate the divine weapons in order to win in the upcoming war. Following his words, Arjuna was trying to please Lord Shiva to attain the divine weapon Pashupatastra.
During this course of trials, he once comes across the Hunter who was aiming for the same beast to which he was aiming at. The Hunter is none other than the Lord Shiva himself and the beast is a demon called Mukasura.
The Hunter and Arjuna were so accurate in their targets that whenever they release their arrows, they are hitting the same point. This had lead to the Argument between these two Archers, where both of them tried to show their supremacy over the other. The Argument had transformed to a wrestling fight and Arjuna began to use all his strengths to win over Lord Shiva, who is in the form of Hunter.
All his efforts going in vain, Arjuna realized that the Hunter is none other than Lord Shiva himself, turned up to present him the divine weapon. Kirata refers to the one who lives in forests, mastering the art of Archery.