The border hamlet of Villa O'Higgins lies some 1,600km south of Santiago and is home to around 450 people.
The village is in the region of Aysén in Chile, but Google Maps clearly locates it on the Argentinean side of the border.
The Chilean government has demanded that Google correct the error as soon as possible.
As the border separating the countries follows a complex combination of lakes, rivers and mountains, the line is extremely complicated and is still disputed in places.
In fact, the two countries nearly went to war in the late 1970s over ownership of some of the remote southern islands. It was only after intervention from the Pope that the war was avoided.
"We have received the request and are working with our partners to get more precise data for the region," said Google spokeswoman Megan Quinn.
"We are constantly working to improve the quality and accuracy of our maps. This is an ongoing process as we receive new information from third-party data providers, and as names and borders around the world continue to evolve."
