Program transformation is an appealing technique which allows to improve run-time efficiency, space-consumption and more generally to optimize a given program. Essentially it consists of a sequence of syntactic program manipulations which preserves some kind of semantic equivalence. One of the basic operations which is used by most program transformation systems is unfolding which consists in the replacement of a procedure call by its definition. While there is a large body of literature on transformation and unfolding of sequential programs, very few papers have addressed this issue for concurrent languages and, to the best of our knowledge, no other has considered unfolding of CHR programs. This paper defines a correct unfolding system for CHR programs. We define an unfolding rule, show its correctness and discuss some conditions which can be used to delete an unfolded rule while preserving the program meaning. We prove that confluence and termination properties are preserved by the above transformations.