Chen, who was formerly ruled as winner in the quarter-final against Stevenson, had her victory overruled as her the 25-year-old rival appealed against the judgement.
Review of the match footage showed that Stevenson score a headshot upon the ending, which should have been recorded as two points.
Chen previously took the lead with just one point and was hence outscored as a result.
After a lot of fuss from spectators, Stevenson lost to Maria del Rosario Espinoza from Maxico later 4-1 in the semi-fnial, eliminating Chen`s chance to become lucky loser.
According to regulations, athletes who lost to finalists could become lucky losers and vie for two Olympic bronze medals.
Born in 1982, Chen was Olympic gold medalist in heavy weight both in 2004 and 2000, when the sport was included into the Olympic agenda.