This can be obtained from Theon the Legendary Vendor in Skyrock. You trade 500 Dragon Fangs for a chance at a legendary item from the chest.
The chest is completely random but I suggest you wait until you are at least 30+ so that the gear you get will be better and help you complete the Dragon Raid and Winter levels.
Ways to get Dragon Fangs (updated with info from DerParol05
650 if you log in each day for 30 days straight
Rewards for leveling a character each level from 31-40 (50 per level, 10 times per character)
Reward for beating the each level of Winter (100 per with 9 total levels)
1-5 for complete Boss Hunt (level 20+ is always 5 as reward)
Rewards for placing in events (currently not active)
2 to 37 for beating 20 floors in a dark tower (raid)
Killing the Dragon 50 teeth (the dragon scroll is needed for entry and reqs lvl 20).
Clearing the desert or swamp dungeon (1 for level 1, 2 for level 2 ...)