Spectacular geology surrounds this tiny community perched on the north bank of the San Juan River. Folded layers of red and gray rock stand out dramatically. Alhambra Rock, a jagged remnant of a volcano, marks the southern approach to Mexican Hat. Another rock, which looks just like an upside-down sombrero, gave Mexican Hat its name; you’ll see this formation two miles north of town.

The land has never proved good for much except its scenery; farmers and ranchers thought it next to worthless. Stories of gold in the San Juan River brought a frenzy of prospecting 1892–1893, but the mining proved mostly a bust. Oil, first struck by drillers in 1908, has brought mostly modest profits. The uranium mill across the river at Halchita gave a boost to the economy from 1956 until it closed in 1965.

Mexican Hat now serves as a modest trade and tourism center. Monument Valley, Valley of the Gods Scenic Drive, Goosenecks State Park, and Grand Gulch Primitive Area lie only short drives away. The shore near town can be a busy place in summer as river runners on the San Juan put in, take out, or just stop for ice and beer.