The jewel once belonged to Valhallarama, and she gave it to Humongously Hotshot when he was tasked to find the Fire-Stone from Lava-Lout Island. He was told to return the jewel to her in the mouth of Xellence, his hunting dragon, if he ever got captured or needed help. However, Xellence died in the Quest and Humungous was forced to spend 15 years in the Lava-Lout jail forges.
Humungous met a prison guard at the jail forges by the name of Terrific Al, and grew to like him. Humungous trusted him with the secret of the ruby-heart's stone, and requested for him to take the jewel to Valhallarama so that she could save him. Terrific Al obliged, and asked for a favour in return - to kill Hiccup. Terrific Al, who was actually Alvin the Treacherous, kept the ruby-heart's stone in the eye of a dragon bracelet that Humungous had made as a thank-you, and spun a tale about Valhallarama throwing the stone out to sea as she had heard that Humungous had failed in the Impossible Task.
The ruby was revealed to be one of the King's Lost Things in the ninth book, when the witch read out the prophecy of the King's Lost Things.
Hiccup later put this stone in a golden bracelet in the shape of a small dragon. He is said to have worn this forever.