Let M n be a Riemannian n-manifold with n = 4. Consider the Riemannian invariant σ(2) defined by σ(2) = τ − (n − 1) min Ric n 2 − 3n + 4 , where τ is the scalar curvature of M n and (min Ric)(p) is the minimum of the Ricci curvature of M n at p. In an earlier article, B. Y. Chen established the following sharp general inequality: σ(2) 5 n 2 (n − 2) 2 2(n 2 − 3n + 4) H 2 for arbitrary n-dimensional conformally flat submanifolds in a Euclidean space, where H 2 denotes the squared mean curvature. The main purpose of this paper is to completely classify the extremal class of conformally flat submanifolds which satisfy the equality case of the above inequality. Our main result states that except open portions of totally geodesic n-planes, open portions of spherical hypercylinders and open portion of round hypercones, conformally flat submanifolds satifying the equality case of the inequality are obtained from some loci of (n − 2)-spheres around some special coordinate-minimal surfaces.