The automaker, which includes the Chrysler, Dodge and Jeep brands, earned $183 million in 2011, compared with a loss of $652 million in the prior year.
And the company said that even better times are ahead, as it forecast it will make about $1.5 billion this year, with an 18% jump in revenue.
Chrysler took a charge of $551 million during the year related to refinancing in order to pay off the higher-interest loans it received from the U.S. and Canadian governments during the 2009 bailout. Despite the loan repayment, taxpayers lost about $1.3 billion of the $12.5 billion in bailout funds Chrysler received in 2009.
Chrysler posted a 24% jump in U.S. auto sales in the year, leading the way to a 22% increase in sales worldwide to 1.86 million vehicles. Revenue jumped 31% in the year to just under $55 billion.
The company reported fourth-quarter net income of $225 million, a turnaround from the net loss of $199 million a year earlier and the company's most profitable quarter since it emerged from bankruptcy.
There are no analysts' forecasts for the company's results, since its stock isn't publicly traded. Besides Fiat's controlling stake in the company, the rest of the shares are held by union-controlled trust funds set up to pay for retiree health care costs.
Ford Motor ( , Fortune 500) has already reported its biggest profit since 1998. General Motors ( , Fortune 500), which also went through a bankruptcy and bailout in 2009 along with Chrysler, is expected to report improved earnings later this month. That will make it the first year since 2004 that all three major U.S. automakers will be profitable at the same time.
The Big Three all also gained U.S. market share in 2011, the first time that has happened since 1988. While U.S. auto sales rebounded in 2011 to 12.8 million vehicles, they were still far below pre-recession levels of between 16 million to 17 million a year.
But the reorganization of 2009, when the automakers shed excess capacity, dealerships and -- in the case of GM and Ford -- their weaker brands have allowed the industry to make money at far lower levels of sales. A few years earlier, they were all losing money despite much larger sales volumes.