The cordial was made from the juice of the Fire-Flowers grew in the Mountains of the Sun. It is obviously colored red due to the essence of the Fire-Flower. A drop would cure almost any illness or wound, even bringing people back from the brink of death. The bottle of the cordial was in was said to be made of diamond. She also received a little pouch and bandolier to carry the bottle around in with it. The bottle contained a limited amount of the cordial, so it had to be used sparingly - therefore, during the time the Pevensies ruled Narnia, Lucy was ordered by Peter not to carry it commonly to war, but to save it for great extremities.
Lucy received the cordial along with her dagger from Father Christmas in the year 1000, at the end of the Age of Winter. She carried it with her during the First Battle of Beruna, where she used it to heal many people, including her brother, Edmund, who was near death. After she was crowned Queen Lucy the Valiant, she did not always carry the cordial with her, evidenced by her not having it during the Battle of Anvard. Lucy left the cordial in Narnia when the Pevensies returned to England fifteen years later.
Lucy recovered the cordial from the royal treasure vault in Cair Paravel when the children returned to Narnia some thirteen centuries later to aid Caspian X. The bottle was still more than half full of the cordial. It saw use in the Second Battle of Beruna, specifically to heal Reepicheep's many battle wounds. She left it in Narnia again when the Pevensies returned home. Afterward, it was regarded by Caspian as a royal treasure.
The Voyage of the Dawn Treader
Caspian took it with him aboard the Dawn Treader ship, where he returned it to Lucy when she, Edmund, and Eustace strayed into Narnia via a magic picture. When the trio and Reepicheep traveled to the Utter East, she gave it back to Caspian, where it remained a Narnian treasure supposedly until the end of the world itself. In the books and deleted scenes, she used it to cure Eustace's seasickness, thus relieving him from his terrible nightmares.