Requires Training: No.
The character knows how to create a variety of alchemical items, such as alchemist's fire, acid, and poison. He can also extract raw, magical essence from the remains of certain creatures, which can then be used in the crafting of magical items.
The Craft Alchemy skill requires a mortar & pestle and an alchemical workbench. To create an alchemical item, the character must place the proper ingredients in the alchemical workbench's inventory, then use the mortar & pestle on the workbench. If the correct ingredients were used and the character has the required skill ranks in Craft Alchemy, an alchemical item is created. Alchemical recipes can be found in recipe books throughout the game. Skilled alchemists can create more potent versions of alchemical items, which are not generally sold by merchants.
Craft Alchemy can also be used to distill certain items, usually the body parts of exotic monsters, into one of the five types of mystical essence required to create magic items. In order to distill an item into its essence form, the character must simply use the mortar & pestle item on the distillable item. If the character has the required ranks in Craft Alchemy, the item is distilled. The minimum skill ranks required, as well as the Essences an item yields, is listed in the item's description.