A soul gem is an enchanted crystal that is designed to hold the soul — i.e., the personality, mind, will, and emotions — of a sentient being. A person whose soul has been trapped is not necessarily dead, but he is completely cut off from his body; without the soul, the body carries on only the most rudimentary of functions, and appears to be in a deep coma. The body can be sustained for years in this state through the use of magical suspended animation, but it cannot return to life unless the soul is somehow restored to it.
Soul gems are a potent source of magical power; the magic derived from trapped souls can be put to a wide variety of uses, and their portable nature allows them to swapped into and out of arcane machinery as if they were batteries. Eventually the soul becomes drained of vitality and the soul gem crumbles, releasing the tortured remnants of the soul to pass into Oblivion — it is by this time too weak to be captured by any of the Nine Hells, useless to the daedra who make their livelihood off of processing departed souls. Properly maintained, however, a soul gem can last for hundreds of years.
A soul trapped inside of a soul gem is conscious but unable to contact the outside world. The terror of being suspended in a place where there is no sense of the body, no ability to hear or see or touch or smell anything, puts a tremendous strain on the mind. Weaker minds simply go catatonic or raving mad within weeks of being imprisoned; those that are stronger in their will and imagination will maintain their sense of themselves by dreaming, crafting worlds and bodies for themselves through the power of their own thoughts. A strong mind can live for many years in such a state — though if it is ever returned to its own body it may well have a hard time realizing that it has in fact returned to the world of the living, and is not simply in another dream.1
Soul gems are somewhat fragile and can be broken by a blunt, heavy object with relatively little effort (though dropping one to the floor from one's hand is not usually enough to harm them). A soul gem that is destroyed in this way releases the trapped soul into the afterlife; because the soul retains its personality and much of its energy, it will then go to whichever of the Nine Hells it would have gone to otherwise, instead of going to Oblivion.2
Few people alive in the eighth century CR know how to craft or use soul gems. They were first crafted by one of the Pantheon3, who then taught the Necromancers how to use them. Originally, they were intended as a way to transport a person's soul to the divine realms for judgment, but both the Necromancers and the daedra lords soon found other uses for them when they realized the trapped souls could be used as a power source. The Necromancers passed on the knowledge of how to transfer a person's soul into a soul gem — and, just as importantly, how to put it back into the body — but after they were scattered and driven to near-extinction by the servants of the Pantheon there were few who retained access to this knowledge. The Necromancers' forbidden books were confiscated and either destroyed or hidden; the servants of the gods were banned from using Necromantic magic, and in any case none of them could read the encoded script that the Necromancers used to write all of their books of lore. Because of the paucity of information available on using them, the only people who now work with soul gems are the daedra lords themselves and those few servants whom they instruct in their use.
Soul gems are considered by most civilized people to be among the blackest of black magics: preying on a sentient being's essence in order to draw power for one's self. A person who recovers a soul gem is expected to hand it over to the Lothanasi so that it can be disposed of properly and the soul trapped within it can be released to go to the afterlife. Those found guilty of hoarding soul gems are likely to be killed for violating the ancient ban on Necromancy that was imposed by the joint decree of the gods and daedra lords.
Raven hin'Elric recently came into possession of a soul gem that contains the trapped soul of her sister Talia. While she would normally be expected to destroy this gem, Raven had kept Talia's body alive in magical stasis for eight years because she had hoped she might one day recover her soul. As of mid-707 CR, she is now keeping the soul gem hidden and trying to research how to transfer Talia's soul back into her body. Within a few months she has come to the conclusion that this will be impossible without the help of Rickkter; while she has an ancient Necromancer spellbook in the Lothanasi Vault, she has no hope of deciphering it or performing the necessary magic without his aid. She eventually convinces him to aid her during the summer of 708, after the Day of the Starchild; in exchange, she grants him unrestricted access to the forbidden spellbook and the rest of the Lightbringer Archives. Talia is then restored to the Lightbringer priesthood … an action that will have repercussions, both good and ill, for generations to come.