Deals damage to the target. If you give it to a chocobo...
The Dead Pepper is an item obtained from the minigame Chocobo Hot and Cold, although it isn't available until Choco becomes a red chocobo. Additionally, the chocobo to the left of the Fat Chocobo in Chocobo's Paradise will max the player's stock of Dead Peppers, but will only do this for the player a limited number of times.
The effects of feeding Choco a Dead Pepper are different according to terrain. They can be used to seek out hidden treasures by drilling the cracks on sides of mountains, the bubbling waters in the sea, and fly up into the Chocobo's Air Garden. They can also be used in battle to deal 30 damage for every Dead Pepper in the inventory.
Dead Peppers are supposedly named as such because the fruit that bears them has died due to Mist.
Dead Peppers show up in Episode 10 and 20. They are Chobi's favorite food, and they look like giant red chili peppers. When Chobi takes a bite, the chocobo goes berserk.