A chill pill is something that has a relaxing or calming effect. When someone is stressed and you want him/her to calm down, you say “Take a Chill Pill”.
Example of use: Daren was so scared and stressed out on the plane back home, so I yelled at him “Take a chill pill, you’re freaking everybody out”.
The origin of the idiom "Take a Chill Pill" is in the early 1980's when ADHD was first recognized and ADHD pills were being designed. The term for those pills was "chill pill" since they were used for calming hyperactive people (in those days mostly children). As time went by, the term became an idiom to tell people to calm down and relax.