The Lilith's Mirror is a mirror that has the ability to revert monsters to their true forms.
In the anime, Kokoa wanted to use it to be with "Inner Moka". The plan, however, failed due to Tsukune's cousin, Kyouko running into Kokoa and taking the mirror (instead of the rice cakes) by mistake. After Kyouko finds out about the mix-up the Lilith of the mirror calls her master and Kyouko accidentally wishes that the students would reveal themselves. After getting attacked by many of the monsters, Kyouko and Moka team up and help restore the school to normal with Mizore, Kurumu, Yukari, and Ruby.
In the final chapters of the Season I, Ishigami reveals that she gave the Lilith's Mirror to Kyouko with the intention of stealing Tsukune's soul with an added bonus of releasing all of the students into their monster state through the powers of the artifact in order to create an uproar that would destroy the school. Lilith is later seen in chapters of Season II, seeing that she hangs around the Headmaster and Ruby, it is safe to assume Lilith has become good since her first appearance.