The Chalice was a sidhe relic, a thing of elemental power. For a long time it had been with the Seelie court, it had been in the form of a cauldron for eons. Rhys said that one day they went into the sanctuary where it was kept, and the black cauldron had become a golden chalice. The king of Light and Illusion had thought the cauldron stolen at first, and nearly went to war with the Unseelie over it, until they realized it had not been stolen it had merely changed, much like the Black Coach had gone from being a chariot to a coach to a limo of its own volition.
The Cauldron
Doyle explained that some of the powers of the cauldron had been that it could feed thousands and never run empty; that dead soldiers could rise from it, alive the next day, though robbed of their speech. Once there had been three main cauldrons; the great cauldron could do anything the lesser two could do, one of which could heal and feed, the other produced treasure and gold. When they had vanished one day after the second weirding, the sacrifice of power that had created the Nameless, they lost their ability to feed their followers.
Rhys said that the relics never worked just because they wanted them to, they only worked if there was need. 'Want' had nothing to do with it.
The Chalice
The chalice returned to the sidhe through Meredith who dreamed of a lady in a dark cloak, the lady drew the chalice from the trunk of a tree she had grown from her staff. When the chalice began to glow in her hand, she bade Meredith to drink from it. She did so and said it was like drinking power. When she awoke from the dream the chalice had followed her into reality, and was in her bed with her. It seemed to amplify any other magics performed in its presence.