Schilling, in an interview with The Providence Journal, said Chafee frightened investors away from his financially troubled 38 Studios.
He said a video-game company that had been planning to put $35 million into his firm to do a sequel to "Kingdoms of Amalur: Reckoning" backed out in mid-May, immediately after Chafee said the state was trying to keep 38 Studios "solvent."
Speaking with reporters, Chafee said investors aren't "going to be scared away by some governor's comments."
"It just defies logic," he said.
The company laid off 291 employees in Providence and 100 in Maryland last week. If 38 Studios collapses, Rhode Island taxpayers will be on the hook for more than $100 million, while Schilling says he will lose $50 million.
Schilling, who began his career in 1988 with the Baltimore Orioles, played in four World Series, with the losing Philadelphia Phillies in 1993 and the winning Arizona Diamondbacks and Boston Red Sox in 2001, 2004 and 2007. His 11-2 post-season record is the best of any pitcher who has started in at least 10 games.
Schilling blamed the state for 38 Studios' troubles, saying it failed to meet promises to provide film production tax credits and to postpone a $1.12 million payment due May 1 that would have allowed the company to meet payroll.
He called Chafee's remark "devastating."
Swim Week Miami Beach 2014 [PHOTOS]