MESTIZO. In New Spain a mestizo was a person born in the New World with one Spanish-born and one Indian parent. Frequently, mulattos passed into this group as racial characteristics blended over centuries of settlement. On the social ladder, mestizos occupied a middle rung below pure bloods, but above Indians, free blacks, and slaves. The legal status of mestizos, like their heritage, was mixed.
Full article on the Texas State Historical Association's Handbook of Texas Online