Cut bacon strips in half. In a large skillet over medium heat, cook bacon until almost crisp; drain. Wrap each bacon piece around a water chestnut and secure with a toothpick.
Place in an ungreased 13-in. x 9-in. baking dish.
In a small bowl, combine the brown sugar, mayonnaise and chili sauce; pour over water chestnuts.
Bake, uncovered, at 350° for 30 minutes or until hot and bubbly.