The Mage's Cap, also known as the Minish Cap, is the original source of power of Vaati in The Minish Cap. It has the power to grant the wishes of the one who wears it. Its creator is Ezlo, who had intended it to be a gift for the humans.
Prior to the events in The Minish Cap, Ezlo, a Minish, had created a hat that was able to make the wishes of its wearer come true. It was supposed to be a gift for the humans, but Vaati, his apprentice, took it for himself. The first things Vaati did was changing himself into a Hylian and his master into a hat. After that, he planned to use his new powers to obtain the Light Force. He did manage to steal some of it, and as such considered himself powerful enough to take on Link. However, he was defeated, leaving only the Mage's Cap behind. Ezlo told Zelda to combine her power (the part of the Light Force Vaati did not obtain) with the Minish Cap in order to undo all the damage done by Vaati. After that, the cap was overloaded with magic, and as a result it fell apart and lost its power.
Interestingly, when Vaati wears the hat, it turns a dark, near black purple, yet when Zelda wears it, it retains its shape.
Powers and Stats
Name: The Mage's Cap
Origin: The Legend of Zelda
Powers and Abilities: Grants the wishes of the wearer
Attack Potency: Continent level (Fueled by only a fraction of the Light Force, the Cap's power to grant wishes was great enough to undo all the damage a Light Force enchanced Vaati caused to the Kingdom of Hyrule and proved capable of destroying the Army of Evil that was previously sealed in the Bound Chest, something the entire Light Force and Picori Blade failed to previously do)
Wielder(s): Princess Zelda (Minish Cap), Vaati
Material or Element: Some kind of fabric that was enchanted by magic
Needed Prerequisite for Use: Wear it