Isaac holds the Notched Axe above his head as long as he is in that room, and can break any obstacles he touches, as well as being able to break through walls that lead into Secret Rooms.
Isaac stops shooting tears and holds the Notched Axe like The Forgotten's club, and can break obstacles, blow open doors, and hit enemies for 3x damage by swinging it. The Notched Axe has 64 charges. Hitting rocks or opening doors depletes 1 charge for each obstacle destroyed. Hitting enemies depletes 2 charges. Isaac can toggle back and forth between tears and using the Notched Axe by pressing the Active Item button. Once the Notched Axe runs out of charges, it cannot be used for the rest of the floor.
If Isaac takes damage while using the Notched Axe, his current use of the Axe will end.
Isaac cannot attack or pick up other items while using the Notched Axe.
Activating the item while it is already being used will end the effect. This does not require any charge.
Obstacles destroyed by the Notched Axe will never fill pits.
The Notched Axe may be used to get access to the Mines. The door will break open with one swing.
Notched Axe shares its synergies with The Forgotten's bone club. See that page for details.
Notched Axe, like The Forgotten's bone club, may be used to pick up items that are just out of reach over a pit or spikes. This does not require any charge.
Notched Axe can open secret rooms, and so it can be used on walls to test for secret rooms without using charge.
Increased durability: Each use of the axe has a very high chance not to use a charge.
Faster usage: The axe can be swung up to four times per second, regardless of Judas' tears stat.
Higher knockback: Enemies are knocked back when hit, receiving 8 + 0.2 × floor damage if they collide with a wall, obstacle, or other enemies.
Fire effect: The axe will set enemies on fire. The burn deals damage equal to Judas' damage, and ticks up to 5 times.
Increased luck: destroying obstacles with the axe has an increased chance to spawn pickups.
Destroying Poops will spawn pickups much more frequently. When combined with Petrified Poop, the chance becomes 100% and will often result in multiple pickups from a single poop.
Destroying Props (such as Urns, Mushrooms, Skulls, and Polyps) gives the prop an extra chance to drop its rewards. This can result in a single prop giving multiple drops.
Destroying Fool's Gold rocks will drop significantly more coins.
Book of Virtues: When used with the Book of Virtues, breaking obstacles has a chance to generate wisps that have different effects based on the "mineral" mined, from most common to least common:
Dip wisp (can only be obtained from poop): Fires brown tears that deal 1.5 damage and has extremely low health.
Black wisp: Fires black tears that have the effect of A Lump of Coal and deal 2.5 damage.
Silver wisp: Fires metallic tears that have the effect of Iron Bar and deal 4 damage.
Gold wisp: Fires penny tears that can turn enemies gold similar to Midas' Touch and deal 3.5 damage.
Red wisp: Fires laser tears similar to the ones fired by Technology and deal 3.5 damage.
Blue wisp: Fires diamond tears similar to the ones fired by Crown Of Light that deal 7 damage.
Broken Padlock: Allows the Notched Axe to open locked chests and doors. The opening of chests does not use durability, however when opening locked doors, only every other door does not use durability for first four doors opened on the current floor. If Isaac uses the axe's durability or puts away the axe the other door uses durability to open.
Ipecac: Melee attacks will trigger an explosion when they makes contact with an enemy; unlike with the Forgotten's bone club, Isaac will take damage from these Ipecac explosions.
Found Soul: Found Soul gets a Notched Axe that breaks after a single use. If Notched Axe is dropped and picked up again, Found Soul will be able to use it again.
Glowing Hourglass & Schoolbag: Notched Axe will be fully recharged after going back in time to the previous floor.
3DS The icon of Notched Axe as seen on the lower 3DS screen
Trivia
This item is a reference to Markus "Notch" Persson, the creator of Minecraft.
It resembles an Iron Pickaxe, which can be used to mine stones and ores.
The item durability being 64 could also be a reference the max amount of copies you could hold in a slot for most items in Minecraft.
The item is also a reference to the Notched Pickaxe from The Elder Scrolls V: Skyrim, which itself was most likely also a reference to Notch.
This item got significantly buffed from the original Binding of Isaac, where it could not open up secret rooms and could only break 1 rock for every use, though it did only have a 1 room recharge time.
The "mineral" wisps that appear when using Book of Virtues with this item follow the same scheme as they do in Minecraft, giving the player black, silver, gold, blue, and red wisps, most likely corresponding to the Minecraft minerals coal, iron, gold, diamond, and redstone respectively.
The new effect from The Book of Belial resembles an enchanted pickaxe that appears to have the following Minecraft enchantments: Efficiency (quicker usage), Fire Aspect (setting enemies on fire), Fortune (increased amount of drops when destroying obstacles), Knockback (increased knockback) and Unbreaking (increased durability).
The synergy as a whole references the fact that enchanted books are used to augment tools in Minecraft.
Using Iron Bar to repair the item is another reference to Minecraft where you can repair Iron Pickaxes using iron and an Anvil.
Isaac holds the Notched Axe above his head as long as he is in that room, and can break any obstacles he touches, as well as being able to break through walls that lead into 
Secret Rooms.
Isaac stops shooting tears and holds the Notched Axe like 
The Forgotten's club, and can break obstacles, blow open doors, and hit enemies for 3x damage by swinging it. The Notched Axe has 64 charges. Hitting rocks or opening doors depletes 1 charge for each obstacle destroyed. Hitting enemies depletes 2 charges. Isaac can toggle back and forth between tears and using the Notched Axe by pressing the Active Item button. Once the Notched Axe runs out of charges, it cannot be used for the rest of the floor.
Iron Bar. This includes 
Batteries, 
Battery Bums, 
4.5 Volt, 
Jumper Cables, etc.
Mines. The door will break open with one swing.
Sticky Nickels.
Angel Rooms, triggering the boss fight.
Tuff Twins and 
The Shell bosses instead of using bombs.
Anti-Gravity: Melee attacks will generate a hovering tear in the shape of the swing of the pickaxe.
The Battery: Causes remaining charge from the previous floor to carry over to the next one.
Bethany: Breaking Notched Axe and using a Soul Charge to activate it again will allow for a single use before immediately breaking.
The Book of Belial + 
Birthright as 
Judas / 
Dark Judas: The axe receives a purplish glow and receives the following upgrades:
Poops will spawn pickups much more frequently. When combined with 
Petrified Poop, the chance becomes 100% and will often result in multiple pickups from a single poop.
Book of Virtues: When used with the Book of Virtues, breaking obstacles has a chance to generate wisps that have different effects based on the "mineral" mined, from most common to least common:
A Lump of Coal and deal 2.5 damage.
Midas' Touch and deal 3.5 damage.
Technology and deal 3.5 damage.
Crown Of Light that deal 7 damage.
Broken Padlock: Allows the Notched Axe to open locked chests and doors. The opening of chests does not use durability, however when opening locked doors, only every other door does not use durability for first four doors opened on the current floor. If Isaac uses the axe's durability or puts away the axe the other door uses durability to open.
Ipecac: Melee attacks will trigger an explosion when they makes contact with an enemy; unlike with the Forgotten's bone club, Isaac will take damage from these Ipecac explosions.
Car Battery: No effect.
Found Soul: Found Soul gets a Notched Axe that breaks after a single use. If Notched Axe is dropped and picked up again, Found Soul will be able to use it again.
Glowing Hourglass & 
Schoolbag: Notched Axe will be fully recharged after going back in time to the previous floor.
3DS The icon of Notched Axe as seen on the lower 3DS screen
The Binding of Isaac: Rebirth
