Let $q$ be a prime power, $\mathbb F_q$ be the finite field of order $q$ and $\mathbb F_q(x)$ be the field of rational functions over $\mathbb F_q$. In this paper we classify all rational functions $\varphi\in \mathbb F_q(x)$ of degree 3 that induce a permutation of $\mathbb P^1(\mathbb F_q)$. Our methods are constructive and the classification is explicit: we provide equations for the coefficients of the rational functions using Galois theoretical methods and Chebotarev Density Theorem for global function fields. As a corollary, we obtain that a permutation rational function of degree 3 permutes $\mathbb F_q$ if and only if it permutes infinitely many of its extension fields. As another corollary, we derive the well-known classification of permutation polynomials of degree 3. As a consequence of our classification, we can also show that there is no complete permutation rational function of degree $3$ unless $3\mid q$ and $\varphi$ is a polynomial.

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