New Magical Item
By using the Horadric Cube to combine any three perfect gems with any magical weapon or armor, you can transmute a new magical weapon or armor of the same type. More often than not, the new weapon or armor that is created has properties that make it vastly superior to the original.
Plus-1 or Plus-2 All Character Stats Amulet
Place three perfect gems and any amulet in the Horadric Cube and transmute them. The resulting item is an amulet that will give you either plus-1 or plus-2 to all your character stats. You can increase your chances of getting the plus-2 amulet if you use three perfect skulls for the transmutation.
Prismatic Amulet
To make the bugged Prismatic Amulet, you need to combine six perfect gems (one of each kind except skull) with any amulet and transmute them in the Horadric Cube. The Prismatic Amulet is a supreme defensive item that gives your character 16 to 25 resistance to all element types including poison, fire, cold, and lightning. However, because this item is bugged, it automatically morphs into a different item the moment you exit the game.
Portal to Secret Cow Level
After defeating Diablo, take the Horadric Cube with you back to the town of Tristram. Head to the west edge of the town to find a slain boy with a wooden leg named Wirt. Loot the boy's corpse to take the wooden leg. Combine the wooden leg with a Tome of Town Portal and transmute them in the Horadric Cube to open a red portal to the secret "cow level" where all the enemies are axe wielding bovines. Although there are a lot of excellent looting opportunities in the cow level, after you kill the Cow King you will be unable to travel back to it.