"It is not just any election, because with this democratic and republican action we will to choose between two alternatives, both of them equally legitimate and democratic," he said on Friday while signing the decree during a ceremony at La Moneda palace.
Voters will be asked to decide between convening a constitutional convention to craft a new national charter and making further reforms to the existing document, reports Efe news.
Pinera's right-wing government agreed to hold the referendum in a bid to tamp down the popular uprising that erupted in mid-October.
The proximate cause for Chile's largest protests since the end of the 1973-1990 Pinochet dictatorship was an increase in transit fares in Santiago, but the grievances quickly expanded to include low pay and pensions, student debt and poor health care, among other issues.
The movement, which brought 1.2 million people - more than 5 per cent of Chile's population - into Santiago on October 25, has made adoption of a new constitution one of its signature demands.
At least 24 people have died during the course of the protests, many of them at the hands of the security forces, and hundreds more have been injured.
If Chileans opt to draft a new constitution, they will then have to decide on how to assemble a constitutional convention.
One plan calls for a mixed assembly comprising members of Congress and ordinary citizens, while the other mandates elections to choose delegates for the sole purpose of drafting a new constitution.
In either case, the provisional calendar envisions the creation of a new charter by the end of 2020, to be followed by another referendum on the draft document.
( With inputs from IANS )