Chests

Chests are pieces of Furniture that are used for holding items. The chest can hold up to 20 item stacks within a 5x4 space.

Chests can only be harvested with a hammer when empty.

Chests can also spawn underground and in other locations, they usually contain useful accessories and other treasure. These chests too can be harvested and brought home once empty.

In the initial version of Terraria, chests could be used to farm more chests when chests (filled with items) placed on sand were mined. This bug was fixed in 1.01; now sand on which a chest is placed will not be affected by gravity. Some chest-duping bugs still existed in 1.02, however.

Loot
The loot for any given chest is determined as follows:

Every chest has one rare item from the lists below, as well as an assortment of other general loot. This extra general loot includes:
 * Coins
 * Arrows
 * Bombs
 * Dynamite
 * Bottles
 * Copper Bars, Iron Bars, Silver Bars, and Gold Bars
 * Shuriken
 * Torches
 * Lesser Healing Potions