Airport webcam video shows the Southwest Airlines plane approaching a runway before its nose abruptly pulls up. A smaller jet is seen crossing the runway that the passenger plane was set to use.
Southwest Flight 2504 safely landed "after the crew performed a precautionary go-around to avoid a possible conflict with another aircraft that entered the runway", an airline spokesperson said in an email.
"The crew followed safety procedures and the flight landed without incident."
Audio recording of communication between the smaller jet and the control tower recorded its pilot misstating instructions from a ground tower employee, who repeated that the pilot should "hold short" of a runway.
About 30 seconds later, the ground tower ordered the pilot "hold your position there".
The tower employee is then heard saying: "FlexJet560, your instructions were to hold short of runway 31 centre."
Separately, a recording of communication between the Southwest crew and another ground tower employee captured its pilot reporting "Southwest 2504 going around" and following directions to climb back to 3000 feet (915 metres).
Seconds later, the audio captures the pilot asking the tower: "Southwest 2504, how'd that happen?"
The second plane, described as a business jet, entered the runway without authorisation, according to the Federal Aviation Administration (FAA).
Flexjet, the plane's owner, said the company is aware "of the occurrence in Chicago".
"Flexjet adheres to the highest safety standards and we are conducting a thorough investigation," a spokesperson said in a statement. "Any action to rectify and ensure the highest safety standards will be taken."
Both the FAA and the National Transportation Safety Board (NSTB) say they are investigating the incident.
The Southwest Flight was en route to Midway Airport from Omaha, Nebraska, according to FlightAware.
Air traffic control audio makes clear that the business jet failed to heed clear instruction not to cross the runway, said Jeff Guzzetti, a former NSTB member and former FAA investigator.
Guzzetti called it a "very serious runway incursion".
"However, the sky is not falling because last year was the lowest recorded number of serious runway incursions in a decade."
US Secretary of Transportation Sean Duffy said the NTSB and the FAA are investigating.
"However, it is imperative that pilots follow the instructions of air traffic controllers. If they do not, their licences will be pulled," he said on X.
In recent weeks four major aviation disasters have occurred in North America.
They include the February 6 crash of a commuter plane in Alaska that killed all 10 people on board and the January 26 midair collision between an Army helicopter and an American Airlines flight at Washington's Ronald Reagan National Airport that killed all 67 aboard the two aircraft.
A medical transport jet with a child patient, her mother and four others aboard crashed on January 31 into a Philadelphia neighbourhood. That crash killed seven people, including all those aboard, and injured 19 others.
Twenty-one people were injured on February 17 when a Delta flight flipped and landed on its roof at Toronto's Pearson Airport.