The Goodsoup Family Diamond was part of the wedding ring that had been passed down through the Goodsoup family.
Minnie Goodsoup lost the diamond when she was betrothed to LeChuck. Little did she know that his real reason for their engagement was to take the valuable jewel from her in order to sell it and buy a ship. She was left at the altar while the pirate removed the diamond from the band and sold it to the Smugglers on Skull Island.
A week later she died of a broken heart. The band of the ring was buried along with her in the Goodsoup Family Crypt.
When Guybrush Threepwood accidentally cursed Elaine Marley he was told of the ring by the Voodoo Lady, who informed him that it was the opposing counterpart of LeChuck's evil ring and the only way to remove the rings curse. After he found the two parts of the Goodsoup ring and joined them together, Threepwood sucessfully counteracted the curse by using it to replace the Cursed Diamond Ring.
Threepwood then used it as his official wedding ring with which to wed Elaine Marley.
Elaine Marley since has worn the diamond as an earring.