Preheat the oven to 400°F and lightly grease a 9x13-inch baking dish.
In a large mixing bowl, combine the pasta sauce, water, ricotta, 1 cup of the shredded mozzarella, chopped cooked chicken, grated Parmesan, and uncooked penne; stir until evenly mixed.
Transfer the mixture to the prepared 9x13 dish and spread into an even layer, then cover tightly with aluminum foil.
Bake covered for 55 minutes, or until the pasta is tender and most of the liquid is absorbed.
Remove the foil, sprinkle the remaining 1 cup mozzarella over the top, and return to the oven uncovered for 5 to 10 minutes until the cheese is melted and bubbly.
Remove from the oven and sprinkle with chopped fresh basil before serving.