The Third Eye is a Quest item and sacred artifact left by the ancient inhabitants of Weyard, most likely the Jenei. Before Alchemy was sealed away, the ancients hid this stone in the Warrior's Hill to ensure that only Adepts could reach it. According to the people of Harun Village, it is an object that will lead the way.
The Third Eye is recovered after completing the Warrior's Hill. Many party members, especially Tyrell and Eoleo, are upset that what appears to be a simple stone is supposed to guide them. It serves no purpose until players take it to Yamata City. The Third Eye appears to take on a will of its own, reviving Himi from a state of unconsciousness.
After waking Himi, the Third Eye leaves the imprint of its design on her forehead, giving the impression of Himi having, as the name suggests, a "third eye." The Third Eye gives her the Search Psynergy, which serves a similar-but-significantly-different function as the Reveal Psynergy. She also can see future events and other events in the present, although it is unclear whether this is due to the Third Eye or if it is an ability Himi already possessed.