The Ink Grenade is an infant Nemacyst Inker housed inside an Incendiary Grenade casing. It releases a thick black and green poisonous smoke that eats away at enemies' health and obscures their vision.
While not as lethal as a Fragmentation Grenade, a well-thrown Ink Grenade can temporarily neutralize multiple Locust and buy the Gears time to scavenge for weapons and ammo, seek cover, or move in for the kill. However, when used against other players, it's easy for them to escape because it affects health over time. In that case, it should be used when your team can mop up the damaged foes.
Ink Grenades were first introduced in Gears of War 2.