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Slit chestnuts: Place one chestnut on a cutting board with the flat side down (rounded side up). Grasp the chestnuts firmly between your thumb and pointer finger and use a serrated knife to make a long slit across the rounded side of the nut. Be sure you cut all the way through the shell. Then make a second cut, forming an x" on the rounded side of chestnut. Making a slit in the chestnut is essential to ensure they don't explode in the oven and will make them easier to peel.
Soak: Place chestnuts in a bowl and cover them with water. Let them soak overnight or for 10-12 hours. (Or, see my notes for a quicker soak option).
Roast: Preheat oven to 350ºF. Remove the chestnuts from the water and pat them dry. Place them in a single layer on a baking sheet with the flat side down and slit side facing up. Roast chestnuts for 30-35 minutes or until you see that the skins have pulled back and the nut inside has softened.
Steam: As soon as you remove them from the oven, place the hot chestnuts on a damp kitchen towel, lifting the ends of the towel to form a bag. Twist the bag closed and squeeze the chestnuts inside firmly (you should hear them crackle). Let them sit in the towel for 10-15 minutes. This allows any extra steam to escape and will aid in the peeling process.
Peel: Once the chestnuts have had a chance to steam, you can start removing the skins. It's easiest to remove the skins when the nuts are hot so remove the shell immediately by gently pulling back on the "x" and peeling away hairy, papery skin around the chestnut to reveal the yellow nut inside. Discard any nuts that seems gooey or look like they are spoiled inside.
Enjoy: Eat them plain, serve them with soup or pasta, or store them in the fridge for up to 3 days.