Here are three folktales which supposedly explain how Stonehenge was built which involve Merlin the wizard, the Devil, and Giants.
1. Merlin:
The myth involving Merlin the wizard comes from the writer Geoffrey of Monmouth, who lived in the twelfth century. According to the story, there was a battle during the fifth century in which many British nobles were killed fighting against the Saxons. The nobles were buried on Salisbury Plain (the modern-day location of Stonehenge). The king, Aureoles Ambrosias, wanted to build a memorial to honor the fallen nobles. He wanted to use a stone circle in Ireland, called the Giants’ Ring, as the memorial. Legend had it that giants had brought the stones to Ireland from Africa because they had magical properties. The king sent Merlin with an army to retrieve the stones from Ireland. The army prevailed in battle against the Irish but couldn’t move the stones, so Merlin used his wizardry to move the stones to England.
2. Devil:
According to another tale, the Devil was the architect of Stonehenge. The story tells that an elderly Irish woman originally owned the stones used to build Stonehenge. The Devil wanted the stones, so he disguised himself as a man and worked out a deal with the woman. In return for the stones, he agreed to pay her as many gold coins as she could count before he finished moving them. The woman thought it would take him a long time to move the stones and therefore she would be able to keep a great deal of the gold, so she agreed. The Devil then used his powers to instantly move the stones to England, cheating the woman of any gold. After he had moved the stones to England, the Devil claimed that nobody could guess the number of stones in the monument. A strong and wise friar, however, guessed correctly. The Devil threw a stone at him in a fit of anger, and it hit the friar on the heel, denting the stone. The stone depicted in the legend is known as the Heel Stone. It sits near Stonehenge.
3. The Giant:
A final legend claims that Stonehenge was formed when giants who lived on the plain were suddenly turned to stone while dancing in a circle and holding hands. This story arose because the stones look like they could be figures holding hands.
Source: Anthropology.msu.edu