The chain rule provides a formula for finding the derivative of a composite function h(x) = f(g(x)). The formula is: h'(x) = f'(g(x))g'(x). This takes the derivative of the outer function f with respect to the inner function g, and multiplies it by the derivative of the inner function g. An example applies the chain rule to find the derivative of h(x) = (x3 + 4x)3/2 by identifying the inner and outer functions, taking their individual derivatives, and plugging into the chain rule formula.