The setup for the classic chip shot is probably the most unique of all stances in the game.
With your feet a maximum of one foot apart and the ball lined up off the inside of the back foot, place the hands in a position so that the club face is square to the target and the hands are lined up even with the inside of the front thigh. From this position place a little extra weight on the front foot and bend the knees slightly more than during a normal (full swing) setup.
Often when chipping it is good practice to choke down on the club anywhere from half an inch to 3 or 4 inches. This allows golfer to get closer to the ball and to be more aggressive with the shot. The closer your hands are to the club head, the more control over it you will have.