Through time of creation of it is unknown. What is known of the Havoc Staff mainly remembered by being used by Skeletor, is that the Havoc staff was designed to be a key to open a portal to the dimension of Despondos, this dimension has negative side effects to many casters who are not strong enough to defend themselves from the deadly poisons which are emitted from the opening. To combat this the Havoc Staff was created as a mystical conduit weapon, sole purpose was to open the gateway and protect those opening the portal from the poisons of the other side.
This was discovered and copied by Hordak in use to try to send the kingdom of King Grayskull into the dimension itself. the owner of the havoc staff was that of the now currently called the Faceless One. who was ruler of the kingdom of Zalesia. The staff being a royal heirloom, was taken in a trade to a mysterious cloaked stranger who saved the faceless ones daughter (later to be Evil Lyn) from the wrath of the Snakemen and their snake god Serpos.
The staff was lost to the world from that day, but many centuries later re-appeared when an old shaman on the Beserker islands gave a young alchemist named Keldor the staff as a gift that would improve his magical talent greatly. Keldor at the time was taking lessons of the dark magical arts from the disembodied spirit of Hordak in the dimension of Despondos. Though Keldor did not know of the staffs true potential he only saw it as an enhancement to his magical spells.
this would be years later after the loss of his face and sanity and becoming Skeletor, that he would use the havoc staff as well as the dark half of the power sword to become the overlord of evil.
Currently the Havoc Staff resides within the confines of Snake Mountain and never leaves the side of the overlord of evil, Skeletor. using it constantly against He-man (though immune to most magical attacks), Skeletor often uses the staff to summon, conjure, and enhance his large repertoire of magic. often using the staff to mind control his weak minded enemies. (Eg: Superman)