In the jungle, near a long bridge road where you get the side-quest to pick up various boxes of medicine for some woman & take them to the over-pass camp. If you go down below, there is a slight wash that leads to a Jason wannabe (hockey mask & all)...and inside his hut is the chainsaw.
It is relatively weak, as it does something like 20 damage....but it is constant, so you basically catch enemies in a lock where they just keep taking damage & can't react to your attack. All the while you are pressing down the attack button, you are using the gas...which when depleted becomes totally useless. The only way to get it again is on your next playthrough, or by duping it, or maybe by quitting & going loading back to the same hut. I personally was unimpressed by it.
You can go to youtube & type in Dead Island chainsaw or Jason, and it will link you to various videos showing it.
BTW I really wish this game had a double barreled shotgun.
modders can put mods on the frying pan/hatrack/paddle/etc. but they are just temp. fun things to play with as they can't be reparied... i have personally seen mindblowing and homerun frying pans and a flaming hatrack, they are fun things to play around with untill they break..
B&E Mod: Strikes with the rying Pan have a chance to sizzle up some bacon and eggs, which can be eaten and restore the same amount of health as an energy drink.
Mad Hatter Mod: Attacking a zombie's head with the hat rack deposits some stylin heaear. The zombie may die, but he'll look -good- doing it.
ChainGang Mod: Consecutive kills with the chainsaw grant gradually increasing bonuses to turn speed, movement speed, and damage dealt. This effect also exaggerates the distance severed limbs will fly when chopped off.
Thomas Hewitt Mode Mod: Don a leather mask and gain the ability to attack any target, including survivors. Additionally, your Chainsaw no long suffers from durability damage, but being knocked down will drop the chainsaw with a chance of accidently severing your arms off when you pick it up.
Oh, if only...
You will live to demonstrate to everyone who takes a moment to listen why life is so very precious. I am so proud of you.