The Turtles first learn of the eye of Sarnath in The Incredible Shrinking Turtles, when they rescue a dying alien from a fallen spacecraft. Before dying, the alien tells them of its terrible power, and gives Donatello a crystalline tracker in order to find its fragments.
The first fragment has the ability to shrink down objects, as well as reverse the process. The second fragment appeared in "It Came from Beneath the Sewers," where it caused the residue of a Dimension X plant to grow into a monstrous tentacled plant. The exact nature of the third fragment is unknown, since Shredder immediately united all three pieces.
When completed, the Eye allows for the transmogrification of any substance except gold, and the creation of monsters. However, these changes do not seem to last, as they vanish once someone else has taken the Eye. Shredder, Baxter Stockman and Blodgett all utilize the helmet for their own advantage.
However, the Eye was destroyed when it came into contact with Donatello's Sarnath-O-Meter, causing a massive explosion.