Mr Chanos, who is betting against the shares of both firms, described the bid as a "shameful example of corporate governance at its worst".
Tesla made a $2.8bn (1.9bn) offer for SolarCity on Tuesday.
Tesla's chief executive Elon Musk said the deal, which will be paid for in Telsa shares, was a "no brainer".
The two firms have close ties.
Mr Musk owns 22% of SolarCity and sits on the company's board. SolarCity's chief executive Lyndon Rive and Mr Musk are cousins.
"As a combined automotive and power storage and power generation company, the potential is there for Tesla to be a trillion-dollar market cap company," Mr Musk said.
Mr Chanos has taken short positions in both Tesla and SolarCity.
When investors take short positions they borrow shares of a company, sell those shares and try to buy them back at a lower price.
Mr Chanos said SolarCity was "headed toward financial distress," and neither company could handle the burden of a tie-up.
"[SolarCity] is burning hundreds of millions in cash every quarter, a burden that now Tesla shareholders will have to bear, at a total cost of over $8bn," he said.
Mr Musk said SolarCity would not impact Telsa's cash flow and would have its own positive cash flow in the next three to six months.
SolarCity reported a loss of $25m in the first quarter and has liabilities of $6bn, which includes debt and unpaid tax.
On Wednesday, Tesla's share price put the company's value at $29.8bn while SolarCity's was $2.2bn.
SolarCity's shares have fallen over 50% during the last year, but rose more than 3% on Wednesday.
Tesla shares closed more than 10% lower.
Tesla's bid to buy struggling solar energy firm SolarCity has been called "shameful" by financier Jim Chanos.