Mutagen
If the Pokemon holding this item does not have a 2nd Type, it gains a 2nd Type same as the type of one of its attacking moves in its current moveset.
The 2nd Type can't be the same as the 1st Type. If the Pokemon already has a 2nd Type, this item will have no effect. If the Pokemon does not have any attacking moves at all, or of a type other than its 1st Type, this item will have no effect. If it has more than one possible type, 2nd Type will be randomized. This change in type occurs immediately after a Pokemon is sent into battle, before receiving any hazard damage or attack. A recalled Pokemon reverts back to its original typing. Hidden Power is considered as a Normal-type move.
Effectively this gives a Pokemon a new 2nd Type as it enters the battle. This means it would have a new STAB to make use of, and a new set of resistances and weaknesses, in exchange for the item slot, which could have been used for arguably better items such as Leftovers or Life Orb. For example:
Haxorus @ Mutagen
Mold Breaker
Adamant
36 HP / 252 Atk / 220 Spe
~ Outrage
~ Aqua Tail
~ Dragon Dance
~ Swords Dance / Brick Break
With this set, Haxorus forgoes a Life Orb in exchange for getting a 2nd Type of Water. This allows him to get a very good secondary STAB (that can be further boosted by rain). Also, its Ice weakness becomes a neutrality, he gets a Steel resistance, and his Water and Fire resistances become doubled (thus only receiving 1/4 damage from these types, very helpful against rain and sun teams). Sure it loses its Grass and Electric resistances, but in exchange, you get a powered-up Double Dancer Kingdra with base 147 Attack. If one decides to drop Swords Dance and use Brick Break instead, you have equal chances of getting a Dragon/Water and Dragon/Fighting, the former having very nice resistances, and the latter having excellent (unresisted?) dual STABs.
Yes, the retypings may be cool, such as Grass/Dragon Serperior (Dragon Pulse), and Electric/Dark Luxray (Crunch), but it some would prove to be disasters in terms of flavor, such as Fighting/Fire Machamp (Fire Punch) or Water/Bug Samurott (Megahorn). Yes, this item is limited only to Pokemon with no secondary types yet. Yes, you can't get a Grass/Fire Sceptile because the Pokemon's movepool limits the possible retypings it could have. However, the variety this one little item adds to the metagame is tremendous. With this item, every Pokemon in existence (with a sole typing) can be rediscovered, and may just find a niche they'd never had.