what you need is a chain break tool. you can use it to pop out the pins in the chainlinks and lengthen or shorten the chain.

you need to shorten the chain.

chain break tools cost roughly $15-20. i recommend the park ct-5 because it's tiny and works

http://www.parktool.com/products/det...=5&item=CT%2D5

edit: btw, the tool works with both types of chains: 3/32" and 1/8"

double edit: if you need to lengthen the chain, btw, you'll need extra pieces of chain, of the same size as your current chain. i think my original post made it seem like the ct-5 was a wundertool.