Eye of Odin
The Eye of Odin was the eye that Odin sacrificed in order to gain greater wisdom.
At some point before 975, the eye was transformed into a jewel, which increased the powers of whoever wore it; however, it would also corrupt them, in a manner reflecting the strengths and weaknesses of its wearer. Its detailed history is unknown until 1994. By this time, it had somehow come into Xanatos' possession. Xanatos donated it to the Museum of Modern Art, but afterwards had a Steel Clan robot steal it from there, partly to frame Goliath for the theft and thereby make the citizens of New York aware enough of the gargoyles' existence that he could manipulate the clan into giving itself up to him for its own safety, partly so that he could gain the leverage of having donated the Eye of Odin to the MOMA and still keep it for himself. ("The Edge")
The following year, Xanatos gave the Eye to Fox as an engagement gift. When she wore it, however, it turned her into a rampaging "werefox". Xanatos had to make a temporary alliance with Goliath in order to remove the Eye from Fox and save her life. Once Goliath removed the Eye from Fox, he took it into his custody at the clock tower, to prevent it from falling into the wrong hands. ("Eye of the Beholder")
Not long afterwards, Macbeth and Demona stole the Eye from the clock tower, alongside the Grimorum Arcanorum and the Phoenix Gate, under the Weird Sisters' influence. ("High Noon") They then proceeded to give all three objects to the Archmage, allowing him to become a nearly all-powerful sorcerer. The Eye of Odin particularly transformed the Archmage into an enhanced version of himself, until Goliath finally stripped it from him, bringing about his destruction. ("Avalon" Part Two; "Avalon" Part Three)
Goliath kept the Eye afterwards, hoping to keep it out of the wrong hands once again, until he and his companions came to Norway during the Avalon World Tour and encountered Odin, who now wanted the Eye back. In final desperation to keep the Eye out of Odin's hands, Goliath donned it and was transformed into an Avatar of the Norse god, possessing near-divine powers; however, the Eye slowly corrupted him even as it had done to Fox and the Archmage, so that, under the guise of protecting his friends, he became increasingly obsessed with destroying Odin as his one rival to ownership of the Eye. Angela finally brought him to his senses, and Goliath quickly discarded the Eye, reverting to normal. Odin claimed it, and made it part of himself once again, presumably permanently. ("Eye of the Storm")
Real World Background
The Eye of Odin stems from Norse mythology, of course; in it, Odin gave up one of his eyes in exchange for a drink from Mimir's well, which bestowed great wisdom upon the drinker. Mimir kept the eye in his well afterwards, but was later on beheaded by the Vanir, a band of Norse gods who were rivals to the Aesir, Odin’s people.
Presumably Mimir's decapitation allowed an unknown party in the Gargoyles Universe to steal the Eye and begin its path that would eventually bring it into contact with Xanatos, Fox, the Archmage, and Goliath in modern times, until it was reunited with Odin at last.
Behind the Scenes
The Eye of Odin is one of only a very small number of concepts that originated in an apocryphal story to end up in the canon. The Eye first appeared in the Gargoyles video game as a powerful artifact created by Viking sorcerers for their chieftain to use as a magical weapon. The Eye caused problems for Goliath first in 994 when the Viking chieftain used it in an attack on Castle Wyvern, the again in 1994, when Demona used it to create an army of robots.
Greg Weisman has stated that he prefers the video game's design of the Eye, which has a more Norse feel (complete with ravens), over the television show's version, which always looked somewhat Egyptian to him. The Eye was in fact originally created for the video game and then added to the television series to help create synergy between the two versions of the property.
For a full history of the Eye's role in the video game, see Eye of Odin (Apocrypha).