After a while, usually about an hour (for dreamcast- three hours for gamecube) after the Chao has first been hatched from its egg,
it will evolve. When your Chao first evolves, it will turn into a cocoon, and transform into either a Hero Chao,
a Dark Chao, or a Neutral Chao. These Chao types have different looks and personalities.
When you first create a Hero or Dark Chao, either the Hero or Dark Garden will open each containing one new Chao egg.
Neutral Chao
A Basic Neutral Chao is light blue with yellow markings and has a round ball floating above its head.
There are two ways of making a Neutral Chao. You can treat your Chao very nice with a Hero Characters (Sonic, Knuckles or Tails)
and Dark Characters (Shadow, Rouge or Dr. Eggman) equally. Pet/hug it so that it stays a light blue colour before evolution.
You could also treat your Chao very badly with Hero and Dark Characters equally.
Attack and throw it with both types so it stays a light blue colour (But I don't really recommend this...).
Hero Chao
A Basic Hero Chao is white with light blue Markings and has a halo floating above its head as its Chao ball.
You can make a Hero Chao by treating it very nicely with a Hero Character until it turns completely white, and its Chao ball turns blue before its first evolution.
Another method is to treat the Chao really badly with a Dark Character until the Chao is white and its Chao ball is blue. (Again not the usual method).
A last method is to keep feeding the Chao some Hero Fruit.
However this could take long and generally the best method of getting a Hero Chao is to be nice to it with a Hero Character.
Dark Chao
A Basic Dark Chao is black with red markings, and has a spiked ball floating above its head instead of a regular Chao ball.
Making a Dark Chao is the opposite to making a Hero Chao.
Treat the Chao very nicely with a dark character until it is completely black and has red markings,
or treat it very badly with hero characters (first approach reccomended).
Again you can also feed it lots of Dark Fruit. But the best method is just to treat it nice with dark characters.
Once your Chao is has evolved into a Hero/Dark/Neutral Chao, it cannot change into a different one until (if) it reincarnates, then you can start again.