Go to the Black Market and buy a Red Apple or Cardboard Box. Take it to your Chao. When it is mature enough, give it the Apple or Cardboard Box to your Chao. It will be confused at first, then a "!" will appear above its head. It will put it on its head. If u do not want it on its head anymore, throw or punch it and it will pop off.

If you want your Chao to have an item on his head, such as a skull or a pumpkin, get a Skeleton Dog (small animal) which can be found on Church Mountain in Pumpkin Hill, as well as some other levels. Go to the Chao Garden and give a Chao the Skeleton Dog. Then, give it the item you want placed on his head. Skulls can be found by digging with Knuckles or Rouge in the Dark Garden; Pumpkins can be found by digging in the Chao or Hero gardens; and other items such as a Cardboard Box can be purchased in the Black Market in the Chao Kindergarten.