The 20-year-old said she was now determined to work hard to bring home an elusive medal for India in August after what she described as a "tough year".
Chand was diagnosed with hyperandrogenism -- a condition that produces high testosterone levels -- that meant she fell foul of International Association of Athletics Federations (IAAF) rules on gender.
But the Court of Arbitration for Sport (CAS) suspended the controversial regulation in 2015 for two years, allowing Chand to compete again.
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Chand, who missed the Commonwealth and Asian Games due to the ban, had challenged the IAAF rule, which she said did not take into account athletes who were "born this way".
Chand clocked 11.30 seconds in the women's 100m heats at a meet in Kazakhstan on Saturday, breaking her own national record and beating the Olympic qualifying mark of 11.32 seconds.
She went on to finish second in the final in 11.24 seconds.
"I am really happy to have qualified for the Olympics. It has been a tough year for me. My hard work and that of my coach has paid off," Chand was quoted as saying by the Press Trust of India.
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"I will continue to work hard and hope to bring a medal for the country," added Chand, one of seven children born to weavers in rural India.
Chand becomes only the second Indian woman ever to qualify for the prestigious 100m event after the country's former sprint star PT Usha made the cut at the 1980 Moscow Olympics.
The IAAF introduced the gender-testing rule after a controversy over the treatment of South African runner Caster Semenya, who also had excessive testosterone levels, but whose ban was lifted following an investigation.
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Semenya, who won a silver medal at the London Olympics, has also qualified for Rio.
The CAS last year asked the IAAF to provide scientific evidence that enhanced testosterone levels led to improved performances in hyperandrogenic athletes.
Critics say gender testing is arbitrary and psychologically damaging.
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