Pick an item to unlock it

Unless it was the Cursed Eye, which lets you do charged shots, I don't think it's an item at all. I just started a challenge run, and the only item I've picked up is the aforementioned Cursed Eye. But every time I take a single hit from the first boss, I'm immediately teleported out of the fight into another random room. It's making fighting the thing impossible.

So, it's either a side-effect of the Cursed Eye... Or it's a bug. My money's on the latter.

At the moment beating the fight with Mega Satan in the base game isn't linked to any "instant" achievement. Winning against him, anyway, is the only way to unlock ending 16, that is required for both Platinum God and Real Platinum God.

The Afterbirth DLC though adds 12 new achievements for defeating Mega Satan, one for each character. Each new achievement unlocks a special coop baby.

In addition to that, beating Mega Satan in Hard Mode contributes to the 12 Hard Mode completion achievements, unlocked for beating every boss and the Boss Rush in Hard Mode. Each of these achievements unlocks another new coop baby.