Clicking the Pan Pipes in your inventory will make your character play a 'Pleasant Tune'. If you play the Pipes whilst drunk the song will change into a 'Merry Tune', and if you play the Pipes when one drink from passing out, you will play a 'Boisterous Tune'. If you play while enraged from a Potion of Rage you will play a 'Noisy Tune' regardless of drunkenness. Although it's not normally possible to use the Pan Pipes to sleep others as a human, one can use a Polymorph Potion to transform into a Satyr or Satyr Elder and use the Pan Pipes to envoke a small AOE sleep spell on players and enemies in the vicinity. This effect can only be used once every 30 minutes. Be warned that using the Pan Pipes to put other players to sleep can only be done while unfriendly and will raise your wanted level, or can be used on unfriendly players.
Pan Pipes are the only item under the classification "Musical Instrument" in the vaultinventory skill.