Great Grammy Shay's diamond-encrusted wrist watch is a wrist watch owned by Great Grammy Shay. It was inherited by the Shays from her, although Spencer and Carly didn't necessarily attend her funeral.
It appeared in the episode iGot a Hot Room (in which it is Carly's birthday) after Spencer told Gibby to install the gummy bear lamp (which is Spencer's gift for Carly) and turn on the light in Carly's room. Due to overheating, the lamp bulb exploded in Carly's room, causing a huge fire that burned up all her belongings, including the watch.
After the accident, Spencer eventually tells an actuary for what happened, gets an $82,000 reimbursement check for the watch due to its diamond encrusted bezel and used the entire amount of money to rebuild Carly's room.