Clean the surface of the stone chimney so any cracks, crevices or other defects will be clearly visible. Scrape out any loose or crumbling mortar with a metal scraper. Use a cold chisel and a hammer to chip out and enlarge any cracks in the mortar or between mortar joints and stones. Try to create at least a 1/8-inch gap to hold new mortar.
Examine the old mortar to try to match it with a replacement; chimneys more than 40-years-old almost certainly were built with a lime-based mortar, which has a different compressive and bonding strength. Using too much cement mortar on an old chimney can create an imbalance situation, which will lead to more cracking or flaking of mortar and stone.
Use Type N or O prepared mortar mixes, which are blended according to standards of the American Society of Testing and Materials for use in repointing. Alternatively, make your own old-fashioned mortar with 1 part Portland cement, 4 parts lime and 15 parts sand. Mix in ground seashells or carbon elements, if necessary, to match the original color; try to blend new mortar to match the old unless the chimney will be painted.
Mix the mortar in a large container until it is firm enough to stand alone but fluid enough to flow easily. Mix in small quantities and discard mortar as soon as it dries and begins to crumble when spread. Dampen the repair spot with a water mister. Hold the mortar in a hawk close to the repair point. Place the mortar in cracks, using a tuckpointing tool, a trowel with a long, thin, flexible blade. Push it completely into the crack.
Fill large holes and cracks in steps. Put enough mortar in to fill the space about halfway and let it dry, then add a finish layer up to the level of the original mortar. Use several stages for any really deep penetration.
Finish the repair with a brick finishing tool or similar tool to form the mortar to conform to the shape of the original. Scrape any excess mortar off the stones with the tuckpointing trowel or finishing tool. Wipe wet mortar off with a damp sponge. Use a stiff bristle or wire brush to clean off any repair mortar that dries on the stone in a thin film.