html:
<input list="items" id="item">
<datalist id="items">
  <option value="A item"  data-xyz = "1" >
  <option value="aa item" data-xyz = "2" >
  <option value="C item"  data-xyz = "3" >
  <option value="D item"  data-xyz = "4" >
  <option value="E item"  data-xyz = "5" >
</datalist> 
<input type="button" id="button" value="Get xyz" />
js:
$("#button").click(function(){
       alert($("#items option:selected").attr('data-xyz'));
});
link to jsbin
Query:
I just need to access the value of 'data-xyz' from selected datalist option on click of "#button" or any event.
jQuery version: 1.7.2
Thanks.
datalist is simply a storage for autocomplete. Since it could be used for multiple elemnts in page, it wil not have a selected property. 
You will need to locate the applicable option yourself such as the following
$("#button").click(function() {
    var val = $('#item').val()
    var xyz = $('#items option').filter(function() {
        return this.value == val;
    }).data('xyz');
    /* if value doesn't match an option, xyz will be undefined*/
    var msg = xyz ? 'xyz=' + xyz : 'No Match';
    alert(msg)
})
DEMO: http://jsfiddle.net/shcRJ/
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