Chrysler has trimmed its second-quarter losses, but warned that an "extraordinary" amount of work is still needed to complete its turnaround.
The smallest of the main three US carmakers made a net loss of $172m (£108m) in the March to June period, down from $197m in January-March.
Chrysler has been helped by higher sales and continuing cost-cutting work.
Its revenues were up 8.2% from the first quarter to $10.5bn, as its sales jumped by 22%.
Chrysler has been run by Italy's Fiat since it exited US Chapter 11 bankruptcy protection in June last year.
In recent months its sales have been lifted by the release of the latest version of its popular Jeep Grand Cherokee four-wheel-drive vehicle.
This is the first new model the company has launched since Fiat bought a 20% stake in the business, and last month President Barack Obama visited a Chrysler factory to see the new Cherokee being produced.
"The second quarter operating profit confirms that Chrysler Group is on track to achieve its goals, yet an extraordinary amount of work still lies ahead," said chief executive Sergio Marchionne.
Chrysler says it aims to break even, or make a small profit, for 2010 as a whole.
Like fellow US carmakers General Motors and Ford it is benefiting from rising sales as the US economy continues to recover.