The Medallion is a powerful artifact that has the ability to weaken Mental enough to kill him. It was created by Gromlin, a blind blacksmith. When it was completed, the Sirian Great Council put a spell on it. It was then split into five different pieces, then gave them to five different species; the Simbas, the ChiChe, Zixies, the Kleers and the Elvians. Mental still managed to get ahold of each of the pieces, but couldn't destroy the pieces. Instead, he guards them from anyone that could challenge him. If the five pieces are put together again, Mental will be vulnerable. Despite their doubts, they decided to find Serious Sam, bring him to their home, and have him find the five pieces and re-create the Medallion so that he can finally defeat Mental.
Despite the odds, Sam managed to gather all five parts of the Medallion and put them back together, finally making Mental weak enough to be defeated normally. When Sam managed to complete the Medallion, the Great Council started their plan to take back Sirius and defeat Mental once and for all, since he was finally vulnerable.
In reality, the Medallion is seemingly worthless. Sam finds several Medallions in the Sirian Great Council's home after he fails to kill Mental, suggesting that there's nothing special about them. Enraged by how the Sirians made Sam go through all of that trouble for a piece of junk, he chased the Sirians around their home in order to show them what he thinks about their Easter Egg hunt for the Medallion's parts.
It is unknown exactly why the Sirians made Sam go through the ordeal of getting the Medallion's pieces in the first place.