If held by an Ampharos, allows it to Mega Evolve into Mega Ampharos if its Trainer has a Key Stone. Each Trainer can only Mega Evolve one Pokémon per battle.
Unaffected by item negating effects (such as Embargo and Klutz). Item manipulating effects (such as Trick and Fling) cannot give Ampharos an Ampharosite or remove an Ampharosite from Ampharos.
Outside of battle
If held by an Ampharos, allows it to Mega Evolve into Mega Ampharos when it performs a Spectacular Talent during a Pokémon Contest Spectacular while its Trainer has a Key Stone. Ampharos will remain a Mega Ampharos until the Talent Round ends.
An uncut Ampharosite appeared in a flashback in Mega Evolution Special II, having been found by Lysandre before Alain could claim it. Alain battled Lysandre for it, but lost.
In the manga
Pokémon - The Legend of the Dragon King
Taichi owns an Ampharosite, which allows his Ampharos to Mega Evolve into Mega Ampharos.