The Shadow Crystal is an item in Twilight Princess.
After Link completes the Lakebed Temple, he is transported to Lanayru Spring. As Link is about to turn to exit the spring, Zant appears right in front of him. Cursing Lanayru the Light Spirit into twilight, transforming Link into a wolf once more, Zant threatens Midna. Wolf Link intervenes between the two and is struck by a red, glowing orb. As a result, the Shadow Crystal gets stuck inside Link's head.
Link is thereafter stuck in his lupine form until he draws the Master Sword from its pedestal in the Sacred Grove. As Link is about to draw the Master Sword, a pure white light emanates from the Master Sword and returns Link to his Hylian form, with the Shadow Crystal driven out in the process.
After Midna recovers it, she realises that it, the remants of Zant's curse, can be used to turn Link into his feral form at will - and, conversely, the Master Sword can return him to normal. This allows Link to freely transform for the remainder of his quest.
Midna recovers the Shadow Crystal after the Master Sword's power has driven it out of Link.