The Alien Egg is believed to be the hatched egg of an Alien located underwater, off the coast from the Sonar Docks. The egg is based on the same looking one in the movie Alien. Some believe that the strange object is some sort of egg, which may be caused by the shape of the object depending on the angle it is viewed from, however, it has become widely accepted that the object is, in fact, a Giant Clam, even if the egg itself barely resembles one.
This myth is a part of the Mount Chiliad Mystery.
After the in-game searches were futile, players began searching files, and they found an actual egg, labeled under "prop_alien_egg_01.ytd." After spawning, it glows green.