The Master Emerald's early history was most likely largely the same as its Mobius Prime counterpart's. The point of divergence was when Knuckles became corrupted by his chaos powers and decided to conquer Mobius. Hoping to disrupt Knuckles' ability to wage war, G.U.N. had Team Dark infiltrate Angel Island during a large-scale assault to steal the Master Emerald. Shortly after Team Dark had secured the Master Emerald in the Hidden Palace Zone however, their operation was foiled by Enerjak.
The Master Emerald's ultimate fate remains unknown. However, given that Angel Island was still afloat by the time of Silver's arrival, it stands to reason that Master Emerald is still on the island.