Yes, only when held by Palkia
>The Lustrous Orb is an exclusive item for Palkia. While being held by Palkia, its Dragon and Water type moves increase in power.
>Raises the power of Palkia's Dragon- and Water-type moves by 4915/4096
When held by another Pokemon, it doesn't do anything. All of the Timespace orbs only work on their respective Pokemon.
The Lustrous Orb raises Water and Dragon moves by 20% when held by Palkia.