Velinde Starsong was granted The Scythe of Elune from Elune to fight against The Burning Legion in Felwood and Ashenvale. By further channeling the energy of the Scythe, the barriers of time and space weakened, and she was able to draw the Worgen into the world of Azeroth. First, they followed her into battle, and with their brutish strength at her command, they tore into the demons of Felwood. As the Night Elves pushed the Legion south, Starsong noticed the worgen packs showing independance, defiance, and were no longer taking orders from the very being who brought them into the world. Velinde Starsong then decided to stop summoning the worgen. Although they were a direct gift from Elune, she began to think of them as somewhat as a threat. As the battles waged on, Starsong noticed the number of Worgen continually growing. It was as though the Scythe no longer required her for the summoning process. While searching for Arugal to ask him for help, she lost the Scythe within a cave in Duskwood.
In the Grizzly Hills, requests that the Alliance assist them recover a relic in a cedar chest. A slip of the tongue hints at this relic being the Scythe, and these trappers under Ivan are possibly members of the Wolfcult of Arugal. Even if they are not, the Shade of Arugal is defeated in future quests, and Ivan seems to have been the last recorded instance of a scythe bearer. What this may bode for the Grizzly Hills has yet to be seen.
In CataclysmThis section concerns content exclusive to Cataclysm.
The Scythe of Elune will be found in Gilneas, where it will play a major part of the Worgen starting questline. Players must recover the Scythe from the Forsaken, who stole it from the druids in the Blackwald.
Speculation about the origin of the Scythe
Lords of the Emerald Flame
The quest  sends the player to the ruined shrine of Mel'thandris to discover the origins of the 'mysterious wolf-men' who have overtaken the area. Upon viewing the tome of Mel'thandris, you see a vision of Velinde Starsong pleading with Elune and presumably being granted a scythe.
The numbers of my companions dwindles, goddess, and my own power shall soon be insufficient to hold back the demons of Felwood.
Goddess, grant me the power to overcome my enemies! Hear me, please, my need is desperate and cause is just!
What... what is this? Could this be the answer to my prayers? Elune has granted me a weapon--this scythe--to defeat the demons.
Jitters' Completed Journal contains a passage about the events immediately following the (re-)discovering of the Scythe of Elune. The unfortunate people there to witness it were afflicted by a strange phenomena: "After the Scythe was freed, a change rippled through the mine. Light from our flickering torches warped, and the strength of our voices seemed beyond our control. Sometimes a man's whisper roared through the tunnels forcing hands on ears, and sometimes our shouts barely traveled a few steps before diminishing into a hint on the wind."
The connection between the Scythe and the Lords of the Emerald Flame also remains a subject of speculation, but recent information point at the Emerald Nightmare, as Worgen were druids that lost their sanity and were put in a slumber.
Corruption of Goldrinn
Another direction to take the connection between the Scythe of Elune and the worgen exists in already published Warcraft related works. The comic series involving Broll Bearmantle shows us that powerful artifacts can be tainted by magic of various sorts. The idol possessed by Broll, the Idol of Remulos, is shown to be connected to a tainted Eranikus. However once Eranikus is cleansed of his taint so is the Idol. Now new lore involving worgen has surfaced. It shows a direct connection to them and the dead ancient Goldrinn. Goldrinn perished in the War of the Ancients while fighting the Burning Legion.
It is probable that during his fight he became tainted by fel energy in a fashion similar to Omen, however he died from it, but the taint stayed in his body most notably his fang that is kept near the practicing night elf druids. These druids take on the form of the wolf, mimicking Goldrinn as he was a wolf Ancient. The tainted Fang of Goldrinn could have been fashioned into the Scythe by the druids at a later date or by Elune herself wishing to provide a new chance for the night elves lost in the madness. However, since you can retrieve the Fang in the Into the Maw! quest, that's unlikely. Since the druids were put into a slumber while in exile the Lords of the Emerald Flame would in fact be the Burning Legion seeping into their dreams from the taint of the artifact.