If held by a Diancie, the Diancite allows it to Mega Evolve into Mega Diancie if its Trainer has a Key Stone. A Trainer can only Mega Evolve one Pokémon per battle (or only have one Mega-Evolved Pokémon at any given momentZA).
As a Mega Stone, it is unaffected by item-negating effects (such as Embargo and Klutz). Item-manipulating effects (such as Trick and Fling) cannot give or remove a Diancite from Diancie.
Outside of battle
If held by a Diancie, the Diancite allows it to Mega Evolve into Mega Diancie when it performs a Spectacular Talent during a Pokémon Contest Spectacular if its Trainer has a Key Stone. Diancie will remain a Mega Diancie until the Talent Round ends.
Removes barrier-covered Pokémon / disruptions (max 10) and damages the foe. Does +100 damage per barrier-covered icon erased. Formerly, the description was "Erases Pokémon that are covered by a barrier (max 10)." and did not deal extra damage until Version 1.3.28 (3DS)/1.9.1 (Mobile).