The Demon's Blood Talismans 魔血玉のタリスマン Romaji: Demon Buraddo no Tarisuman) are composed of an unknown substance, contrary to what the name implies. Even Xelloss said that he wasn't entirely sure of their origins when he reluctantly sold them to Lina Inverse in the novels. In the anime version, he's considerably more knowledgeable on the topic. In both versions, even if the books state it somewhat more tentatively, it is said that it contains the power of the ma-ō of the four planes: Ruby Eye Shabranigdu, Dark Star Dugradigdu, Chaotic Blue and Death Fog.
There is some discrepancy over the color of the talismans. Hajime Kanzaka writes in the final novel that they are white, blue, red, and black, one for each lord and plane; it was a serious plot aspect [see below]. However, Rui Araizumi had been drawing them as all red for many novels, and there was no correction on this matter. Similarly, the talismans are drawn as red in the series.
In the novels, Lina faces off against a piece of Ruby Eye Shabranigdu. During her battle with him, a large part of her strategy is to shatter the talisman piece that bears his power. (Crushing a talisman enabled her to cast a spell roughly equivalent to a Dragon Slave using the appropriate ma-ō's power.) This would be very difficult if they were all red.
The Demon's Blood Talismans were originally created by Lei Magnus. According to Kanzaka, Lei first managed to seal Ruby Eye's power into one of the stones, and then used its power to reach into the other three worlds through unknown (if incredibly powerful) magic. Later on, he gave the talismans to Xelloss as a gift.
The talismans can act as tracking devices for Xelloss since he is familiar with their specific magical energy pattern and can scry for them.
A human bearing these talismans is capable of casting otherwise unavailable spells such as Blast Bomb.
The Philosopher's Stone may be a piece broken off from one of the talismans.
See also Boost, the talismans' activation spell.