The Golem's Eye is a ruby that was infused with arcane magic by the asuran golemancer, Blimm. After Blimm's death, it was kept in his tomb in the crypts underneath Divinity's Reach, safeguarded by various traps and rigged to activate upon touch. Clagg hired a group of adventurers, including Dougal Keane, to help him find the gem.
The Eye is called a "self-replicating ambient thaumaturgic construct" by Clagg. It uses any suitable materials in the environment to create a guardian golem which takes the form of a half-snake creature similar to a krait or naga. The size of the guardian's body can vary, ranging from just taller than a norn to towering over buildings. The guardian is shown to only use surrounding bones to create its bodies. Even if parts of its body are destroyed, the guardian will continue to reform itself so long as it doesn't run out of energy or suitable materials.
If the Golem's Eye runs out of energy and the guardian becomes inactive, the Eye will slowly recharge itself. During this time it is possible to reconfigure the magic of the Eye.