Chiyo is a retired shinobi of the Hidden Sand Village, and the grandmother of Sasori. She and her brother, Ebizou, were widely known throughout the Hidden Sand Village as the village's legendary siblings. She has notably high skills with poison arts, which she is known for using against enemies during the previous great ninja war. She also seems to have some skill with puppet manipulation, as demonstrated during the battle her and Sakura had against Sasori. She was also the one who sealed the Shukaku within Gaara.
She seems to dislike Tsunade a bit, due to the fact that during the war between the Hidden Sand and Hidden Leaf, many of Chiyo's most affective and potent poisons were negated by Tsunade's antidotes. It's a sort of grudge and feeling of defeat that Chiyo has even held all the way to her elderly years, and may explain why she appears to be such a "mean" and bitter person. She had also attacked Kakashi after him and his team arrived to the Hidden Sand, mistaking him for his father, The White Fang.
She traveled along with Naruto and the others when they went out to find the Akatsuki, bringing two scrolls with her that she claimed were capable of working against Sasori's techniques. One reason that she probably wanted to find Sasori so badly was probably because he had been missing for 20 years, he was a rogue and wanted ninja, with no hope at improvement. Since it was her own grandson, she knew she had to be the one to stop him, to see him at least one last time.
Eventually, she and Sakura ended up running into Sasori. They ended up fighting him together, with Chiyo's knowledge, and Sakura's monstrous strength, they ended up destroying his Hiruko puppet and forced him to reveal himself. Chiyo was astound at the fact that it didn't appear that Sasori had aged a single day since he had disappeared, 20 years earlier. It turns out, as he revealed during the fight, that over the years he had transformed himself into a human-puppet.
During the fight, Sasori summoned another puppet to use against Chiyo and Sakura, which turned out to be the remains of the Third Kazekage, who Sasori had murdered and made into a puppet. As a counter, Chiyo used the two scrolls she brought along to summon a pair of puppets, which were apparently Sasori's parents. Sasori didn't seem to care very much, and seemed rather amused by her choice of puppets. He eventually ended up destroying them, and in turn Sakura and Chiyo developed a strategy that destroyed the puppet of the Third Kazekage.
As an attempt to finally end the battle, Chiyo decided to use her ten Chikamatsu puppets technique, and of course, Sasori ended up using his 100 puppet army technique. With their teamwork, Chiyo and Sakura successfully destroyed the puppets, but in the process Chiyo was slit by one of the puppet's blades, and ended up poisoned. Then Sakura, in an attempt to protect Chiyo, Sakura ended up getting stabbed in the stomach with a poisoned katana. Chiyo was very touched by Sakura's efforts and actions, and gave Sakura her one and only poison antidote.
Later on, after they had defeated Sasori, they found Gaara's dead body. Chiyo, knowing that she was near her end, decided to give redemption a second shot and used the rest of her remaining energy to revive Gaara, by giving him the rest of her life force, along with Naruto's combined chakra. The whole situation that had happened seemed to have changed her so much, and felt she had finally got what she wanted. She died a happy death, with reason, and as a hero.