The most powerful of the four, the Chaos Emerald of Life can give life to anyone and anything, even if they're already dead. It was hidden in a volcano in prehistoric Mobius. The Emerald is also guarded by Magma the Volcano God, who would only yield the Emerald after a sacrifice was offered.
In order to obtain the Emerald, Dr. Robotnik sacrificed his goons, Scratch and Grounder. After receiving the Emerald, he used it to make new henchmen, Lava Monsters. Finding out the lava was actually volcanic, hot mud, Dr. Robotnik got Scratch and Grounder back.
Robotnik made a number a monsters with the Chaos Emerald of Life, to fight off Sonic the Hedgehog.