The crescent moon on Lord Shiva’s head adorns His overall spiritual personality. Every item possessed by Him has significance. There are many legends in the Vedic literatures regarding the objects possessed by the Trinity and other gods.
After marrying twenty seven daughters of Daksha, the Moon god Chandra loved and paid attention only to Rohini, one of the daughters and ignored the others. After hearing such an unwelcoming treatment from his daughters, Daksha cursed Chandra that he will lose all his shine and gradually fade away.
Sacred of the curse, the Moon god immediately went to Lord Brahma who asked him to approach Shiva. After hearing from Chandra, Lord Shiva said that the curse cannot be counteracted. Blessing Chandra, Shiva declared: During krishnapaksha you will be waning and uring shuklapaksha you will be waxing. This is how waxing and waning of the Moon came into existence.
Another Vedic school of thoughts says that the Moon god controls the mind. All the meditational energies to the person comes from Shiva who controls even the Lunar deity for Shiva Himself meditates and stays aloof from the material world. This however does not mean He is indifferent to anyone. He is quick to bless anyone striving to discipline and control their mind.