The Skull Gem is an item held by Flavio during the events of Paper Mario: The Thousand-Year Door. The Skull Gem was originally owned by Cortez, and was used to operate his ship, the Black Skull. But, Flavio's ancestors stole it from Cortez, leaving the Black Skull unable to move. The Skull Gem got passed down from parent to offspring until Flavio got hold of it. Flavio can be seen in the Chuckola Cola bar with the Skull Gem on the table.
During Chapter Five, Flavio comes with Mario to Keelhaul Key with the Skull Gem. At the very end of Keelhaul Key, there is a wall that seperates Keelhaul Key and the Pirate's Grotto. The Skull Gem is needed to solve a puzzle that destroys the wall. When Mario defeats Cortez and escapes, he finds that Four-eyes is really Lord Crump and is attacking them. Flavio gets the idea to ask Cortez to use the Black Skull, but Cortez says that it cannot run without the Skull Gem. Flavio reveals that he has the Skull Gem, and trades it to Cortez for usage of his ship.