The rosary is composed of five groups of ten beads with each groups separated by a bead, usually a larger or more ornate one. These beads form a circle, with a short extension of additional beads branching out from the circle. This additional set of beads include a cross or a crucifix.
Its main, and only, use so far is to create holy water. Along with an incantation, the rosary blesses any water it came into contact with during the ritual. Use of the rosary could be modified depending on a hunter's creativity, even allowing hunters to bless entire pipelines or water tanks. In Season 2 (Crossroad Blues), however, Dean holds it while beginning an exorcism and it seems to be a prayer object in this scene, as we see him holding it and touching the beads.