Instructions
Hatch one of the normal eggs in your Chao Garden. You get two eggs when you first enter the garden.
Go to the Black Market, located in the Chao Kindergarten across the road. Buy any colored egg. Eggs are available from 400 to 20,000 rings.
Wait for both Chao to mature. Speed up the maturation process by giving Chao the shiny, colored drives found in story mode stages. The Chao is about to mature when it enters a cocoon.
Buy two Heart Fruits for 300 rings at the Black Market. Give one Heart Fruit to each Chao. The Chao sit down and a ring of red flowers forms around them. This means they are ready to mate.
Put one of the Chao next to the other. The Chao do a mating dance, and an egg appears.
Save your game. Hatch the egg to see if you created a two-toned Chao. The body of a two-toned Chao is one color, while the markings on its hands, feet and head are another. If your Chao does not look like this, reset the game and try to hatch the egg again until a two-toned Chao is produced.