Grace does not eat, instead being fed through a tube into her stomach.
Grace's mother, Pip Hughes, is well known to the school's community for the parties she puts on for the children.
Mrs Hughes and husband Gareth are raising funds to send Grace to Graz Hospital in Austria, which specialises in helping children who do not eat.
The wacky hat fundraiser was a suggestion from Michelle Coleclough, whose daughter goes to the school.
Harry Fraser (9) said it took him an hour to make his chicken-themed hat.
"I have four chickens at home and the chicken on my hat sings if you push it down."
The school of 145 pupils raised $254 for the Amazing Grace Medical Fund.
Fundraising for Grace will continue today with a children's magic show at East Taieri Church at 2.30pm.
Tickets cost $5.
