“Just look at it. Filled with power for its 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 took 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, Medusa would have been a multimillionaire if she wished to sell it. It appears that given her lifelong obsession with the diamond and the idea she claimed it was "filled with power for its owner", Medusa likely seemed to wish to own it for herself, both for the status of being the woman to own the world's largest cut diamond and that her delusions of it containing powers could have somehow made her even richer than simply selling it.
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.