The Lucky Charm is made by Kairi before her departure from the Destiny Islands. The charm is made of sea shells that provide good luck for travelers.
After Sora rescued Kairi from Hollow Bastion, she gives it to him for luck and makes him promise to return it to her once he gets things settled, which he promises to do.
In Kingdom Hearts: Chain of Memories, the charm is changed into a lucky charm of Paopu Fruit under the influence of Namine's ability to alter Sora's memories. However, it changes back to its original form once Sora remembers Kairi.
During the ending credits of Kingdom Hearts II, Sora returns home and finally returns the lucky charm to Kairi.
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