A Keychain (キーホルダー Kīhorudā) is a magical piece of equipment that modifies the appearance and abilities of a Keyblade. In Kingdom Hearts 358/2 Days, the Gear Panel function replaces Keychains, and in Kingdom Hearts Re:coded the Keyblade Chip in Gear Matrix replaces Keychains. Likewise, the Card system replaces Keychains in Kingdom Hearts: Chain of Memories. Cards, however, do not affect appearance, only ability.
The Keychains have the ability to change a Keyblade's stats, grant it special abilities, and give it a new appearance. While most Keyblades have a basic form, like the Kingdom Key, a Keyblade wielder can upgrade and change the form of the Keyblade with a Keychain. In other words, when Sora or another wielder is equipping a "new" Keyblade, he or she is equipping a different Keychain to the Keyblade, changing its form.
It has not yet been explained exactly what a Keychain is and why it has the power to transform the Keyblade. A wielder usually receives a Keychain after "completing" the events that transpire within a world, but the Keyblade wielder is not shown receiving the Keychain from anyone, save for when Tifa hands Sora the Fenrir Keychain after defeating Sephiroth, when Kairi hands Sora her Wayfinder, which turns out to be the Oathkeeper Keychain, and when Ariel gives Sora the Crabclaw Keychain, as well as the few Keychains found in chests. These Keychains are often modeled after elements of the world from which they are received in some way.
Sometimes, a Keyblade does not possess a Keychain. For example, the incomplete Keyblade of heart was missing a Keychain, as are the abandoned Keyblades which litter the Keyblade Graveyard.
The Ends of the Earth, Wayward Wind and Stormfall did not posses Keychains in the Kingdom Hearts II secret video Birth by sleep, as they were not fully designed yet.