Kolto is a highly effective healing agent, and the competitor to the medical fluid bacta. It is applied the same way in Star Wars: Knights of the Old Republic. Kolto is naturally found only on the planet Manaan, where the native Selkath mediate and sell it to both the Galactic Republic and to the Sith, not wanting to cause conflict. Kolto is found in a single, massive chasm at the bottom of the great ocean which completely covers Manaan. The main kolto deposit was guarded by a giant firaxa shark, which the Selkath named as the mythological Progenitor, legendary guardian and source of kolto itself.
During the Jedi Civil War the Republic attempted to devise a procedure which would allow them to synthesize a kolto-like substance. This was not known to be successful, but a synthetic substance with similar properties, bacta, was eventually developed independently by the Vratix of Thyferra.
During the course of Knights of the Old Republic it is possible that Revan could irreparably damage the kolto supply causing a galactic shortage by poisoning the water to kill the giant shark. However, this shortage is not carried into Star Wars: Knights of the Old Republic II.
Read more about this topic: List Of Star Wars Substances