“Just look at it. Filled with power for it's owner.”
The Devil's Eye is the world's biggest diamond, and the main reason of Madame Medusa's ambition. She would do whatever it takes to get her hands on it. It used to belong to pirates that buried their treasure in a cavern in Devil's Bayou. As the world's largest diamond, it surely would have made Medusa millions but given the degree of her obsession, its strongly suggested Medusa planned to simply keep the diamond for herself.
Bianca and Bernard help Penny retrieve it from a skull before the cavern gets flooded. Madame Medusa then hides it inside Penny's Teddy Bear with the intention of smuggling it out of the bayou. However, Penny, Bernard, Bianca, and the Swamp Folk, take the diamond away from Medusa and escape with it. At the end of the film, it is donated to the Smithsonian Institute.