Squirt is a small wallaby/rabbit/gorilla-like creature of unknown origin, he only appeared in the episode "Scare Necessities".
He is often prey by multiple species of different kinds, including humans, due his power to grant the wish of whoever scares him, allowing him to run away as the recipient whose wish was granted is left appeased by the manifestation. In the episode he appears in, he made as a good friend to Iago, who initially (and very ironically) only wanted to take advantage of the magical creature's powers by repeatedly trying to scare Squirt into granting Iago's desire(s), only to fail every time following the first (in which the bird was granted a can of fresh caviar and manicures) due to Squirt finding him amusing more than anything; Abu, on the other hand, had better luck and had a near-endless supply of banana parfait to himself with his periodic scaring of squirt. Ultimately, after coming into a scuffle with Armin Damoola and then later with Squirt's orginal captor (whom Iago and Abu unwittingly stole the creature from), Iago realizes Squirt deserved better than to be used and abused like this; so the bird eventually sets a mirror in front of him, scaring himself, and granting his own wish, sending him to his homeland.
Role in episode
Squirt comes out of a box Abu stole at a shop. As he runs and hides, he grants Aladdin's wish of giving Jasmine a locket. When Jasmine shows Squirt grapes, the creature isn't afraid of them anymore. Abu and Iago have an idea to scare Squirt so Abu can have his banana parfait and Iago gets his vibrating rocking chair. Abu is able to scare Squirt, but not Iago. Squirt just thinks he's being funny. When Iago hides Squirt from Genie, the creature ends up falling from the window of Aladdin's hovel and finds himself at the Skull and Dagger. When Amin Damoola sees him, he wants to keep him, but Iago stops him. After getting attacked by a dragon-like monster, Amin tries to steal Squirt again, but the creature becomes big and scary, which scares the thief away. When the rest of the gang shows up, Iago suggests that Squirt should decide for himself what he wants to do. The parrot shows the creature his reflection and Squirt scares himself away and vanishes. He ends up in his homeland, which is a tropical place with others of his kind.