PokéBase - Pokémon Q&A
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I know its effect, but do you use it on the Pokemon (consumable item), or is it a held item?

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>According to the link I read its a useable item thats in your medicine pouch. So you would use it like a Thunderstone and then it will go away.


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I would like to add on to Pokenubz's answer.

The ability Capsule is a Single-Use item to be used on a Pokémon.  It will change its ability (if it has more than one possible ability); however, it unfortunately will not change to the Pokémon's Hidden Ability, FYI.  (I was super bummed.)