Most law enforcement agencies have an evidence locker or area where evidence is booked into and stored. Where I worked, we had a separate room that was secured by lock and key, and the key had to be signed out after business hours. The officer would fill out the evidence booking form, which itemized and described the evidence, and then place the evidence and the form into a locker. Once the locker was closed, it couldn't be opened by anyone except the evidence custodian.
When the evidence custodian came to work, he would open each locker and remove the evidence to a shelf, bin, drawer, or other suitable area, noting in his evidence log where the item was stored. This is where it would remain until it had to be signed out to go to the crime lab, or taken to court for trial.
In order to sign out the evidence, the person getting custody has to have a legit reason to get it. For example, I wouldn't have been able to sign out evidence in a case I wasn't a party to. Most of the time, if I had to bring evidence to court, I was served a subpoena duces tecum, which required both me and the evidence to appear in court. I would have to show this to the evidence tech to get the evidence out. If the evidence was going to the crime lab, a designated person from the lab would be detailed to receive and transport the evidence.
For evidence to be introduced at trial, there has to be a documented chain of custody. This means the witness offering it into evidence has to be able to show where the evidence was at any moment from the time it was seized until that moment in court. In rare cases, every person who had custody has to testify to when and where they received or relinquished the evidence, and for what purpose. The idea is that the witness has to show that the evidence is the same as that originally seized, and that it is in substantially the same condition as when it was seized.
Small departments might have their entire evidence storage in a closet. Larger ones often have multiple warehouses of evidence. It accumulates quickly. For example, my medium-size (300 sworn) agency had at least 200 firearms in the evidence locker at any one time, along with every sort of property you can imagine.
When the criminal matter connected with the evidence is concluded, the agency holding the evidence disposes of it. This can be by returning it to the rightful owner (if you know who that is), by destroying it (in the case of narcotics), or by auctioning it off. Most agencies that use the latter process contract with an auction service to do this, with proceeds going back into the local government general fund. If you check local ads, you'll sometimes see a "police auction" advertised.
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