The Merchant family painting was an old painting of the late Merchant family. It became haunted by two of the family members shortly after their deaths.
The Merchant family commissioned this painting some point before every member was murdered. The crime was pinned on Isaiah Merchant, the patriarch of the family, but it was in fact committed by Melanie Merchant, Isaiah's adopted daughter. The two began haunting the painting for separate reasons: Isaiah wanted to warn people about Melanie, while Melanie wanted to murder more people.
After the family's demise, the painting fell into the possession of Daniel Blake, who sold it as his charity auction. The first known person to buy it was Mark Telesca. On the night he purchased, Melanie's ghost appeared and murdered Mark along with his wife Ann Telesca.
The painting was returned to Daniel. Sam and Dean Winchester correctly deduced that the painting was haunted and intended to destroy it. They tried to burn it, only for the painting to regenerate much to their horror. Despite Daniel's daughter Sarah Blake begging Daniel not to sell it again, Daniel was offered a persuasive amount of money by Evelyn, who too was killed by Melanie.
Sam and Dean suspected Isaiah was the murderer, and went to the Merchant family mausoleum and salted and burned Isaiah Merchant's bones. However, the brothers soon realized their mistake. Melanie began attacking Sam and Sarah while Dean salted and burned a doll containing Melanie's hair. The removal of Isaiah and Melanie's ghosts freed the painting from their influences, and Sarah was able to have the painting destroyed for good.
The Merchant family painting originally consisted of Isaiah Merchant, Isaiah's wife and two sons, and Melanie. There was a table with a razor in front of them and a painting behind them. Isaiah would sometimes change where he was looking, even looking down on his evil adopted daughter. This is what led Sam and Dean to suspect he was the killer. Melanie, on the other hand, would visibly disappear from the painting when she went around killing people. She also used the razor in the painting as a weapon.
Most importantly, Isaiah altered the painting in the background to depict the mausoleum, hoping whoever saw it would go there and dispatch his adopted daughter's ghost. While this plan somewhat backfired, Melanie was put to rest, as her doll was indeed at the mausoleum. As long as the painting was haunted, it could not be destroyed.
Virtually everyone who saw the painting considered it creepy and unappealing. Sarah called it a "monstrosity" and "bad taste".