As noted above, the problem could be a size mismatch or it may be the chain is twisted. So try the easy fix first- untwist the chain.
Most gypsies or wildcats (same thing so I am going to use "chainwheel" as Wikipedia recommends for no confusion) are marked with the size and type of chain it will handle, ie "3/8 BBB". Sometimes it is a code that the manufacturer has to decode for you. Usually you have to remove the chainwheel as the markings are on the bottom.
If there is no size code, then the next thing you can do is go to West Marine or similar chandlery and buy a foot of BBB and G4 (high tensile) chain (the most common types used) and see which one fits into the chainwheel best. Then match it up to your existing chain and see if you have the wrong type. Usually "G4" or "BBB" is embossed on each chain link.
David