In large mixing bowl, combine cheese packet from potatoes, boiling water and milk; whisk until smooth. Stir in dried potatoes and chicken; transfer to a greased 8x8-inch baking dish.
Top with shredded cheese and crushed potato chips. Cover with aluminum foil.
Bake in a preheated 400°F oven 30 minutes. Remove foil; continue baking until potatoes are tender (about 10-15 minutes).