No one was convicted after two trials at the time, even though three persons were arrested.
The reinvestigation has been ordered following the recent reform of Scotland's ancient double jeopardy law, which means that the men originally accused of the murder could face a re-trial.
The decision to investigate the Chhokar's killing was announced during a meeting between his family and the Lord Advocate Frank Mulholland and the Solicitor General for Scotland, Lesley Thomson, in Edinburgh last week.
Chhokar, 32, died of multiple wounds in Overtown, North Lanarfkshire, on 4 November 1998.
One of the arrested persons, Ronnie Coulter, was acquitted in 1999 after blaming his nephew Andrew Coulter and another man, David Montgomery, for the murder.
Coulter and Montgomery, faced trial in 2000 but were also cleared after they claimed Ronnie had killed Chhokar.
The case has been likened to that of black teenager Stephen Lawrence, whose racist killing in London 1993 led to prolonged inquiries and charges of the police being institutionally racist.
Two inquiries were ordered in the aftermath of failed prosecutions.