Blue Flame

Blue Fire is an exotic object and item featured in, not to be confused with the Blue Candle.

Summary
Blue Fire is a "cold flame" with which to counter the "hot" Red Ice. An Empty Bottle is needed to store the object as an item, which is then dumped near Red Ice to "melt" it. Note that Keese will become Ice Keese if they fly through Blue Fire.

The object can be found free of charge in Ice Cavern and Ganon's Castle, and the item can be bought for 300 Rupees at the Medicine Shop for 300 Rupees. In Master Quest, Blue Fire can also be found in the Gerudo's Training Ground.

Blue Fire is required in Ocarina of Time to progress: it is used to complete the Ice Cavern and obtain the Iron Boots, and is used to get the Zora Tunic by melting Red Ice throughout Zora's Domain; both items are needed to enter and complete the Water Temple. As mentioned before, it reappears in Ganon's Castle, used to solve the Water Trial.

Spirit Tracks features a similar object; it is not an item. There, it "burns" the boomerang and can be used to freeze water.

Trivia

 * Though the Ice Cavern is filled with Red Ice, it is likely that the-presence-of in Zora's Domain was caused by Ganondorf somehow, especially if you just toss it on the list of other terrible things he had done even up to then. However, Navi suggests that the Blue Fire is "not natural", even though it seems to have always been a part of the Ice Cavern along with the Red Ice and it can be purchased as a child; what this could mean is unknown. Perhaps both fire and ice, and maybe even the Ice Cavern itself, are part of some ancient magic, and this may even have something to do with the Iron Boots being hidden within the cave.