Cursed Items are almost exclusively found as offerings at the various Daedric shrines. Cursed items appear exactly like their regular counterparts, except they cause a hostile Dremora Lord to appear behind you when added to your inventory. Here is a list of items which may be cursed:
Also of note:
- Gold (Gold_Dae_cursed_001 or Gold_Dae_cursed_005) - CS only, this never appears in the game.
- Unlike normal items, you cannot move cursed items by left-clicking them. This is a good way to distinguish between cursed and non-cursed items.
While Cursed Items are meant to be something of a nuisance to deter thieves, they can be used to your advantage.
- Cursed ingredients (Daedra's Heart, Diamond, Emerald, Pearl, Raw Ebony, Ruby) will not stack with regular ingredients of the same type in your inventory. They are considered different ingredients, but with the same properties. This means that you can mix a regular Diamond with a cursed Diamond, and get a single potion with all four effects. (Using this technique it's possible to get one potion with up to EIGHT total effects, though of course, not all of them will be positive.)
- The Dremora Lords will always be carrying good quality weapons - Dwarven, Ebony, and even Daedric at higher levels. See here for a full list. Taking cursed items (even if you don't want to keep it) is a great way to stock up on these items, which usually fetch a very high price at vendors rich enough to afford them. Provided you don't have too much difficulty killing Dremora Lords, these are worth far more than the jewels and trinkets on the altar. This method is also a good source of Daedra's Hearts.
- Chest (com_chest_Daed_cursed) - One in Ald Daedroth, Inner Shrine, and another in Almurbalarammi, Shrine. Both contain a nice stash of random treasure. These function just like the items, except that of course, you can't pick them up.
- A nobleman's chest (chest_tomb_Sandas) - Found in Sandas Ancestral Tomb, contains a bunch of Orcish Armor, Cyrodiilic Brandy, and some gold. Opening it causes two seemingly dead Skeletons to get up and attack you.
- Ancient Silver Dagger (Silver Dagger_Hanin Cursed) - 8 of them found in Ibar-Dad, these summon Ancestral Ghosts instead of Dremora Lords.
- Dwemer Coin (misc_dwrv_cursed_coin) - 2 of them in Ald Sotha, Lower Level, these summon Dwarven Spectres. They also have a greater value than normal Dwemer coins, 125 instead of 50 gold.