San Bartolo Coyotepec (Hill of the Coyote), on Highway 175 14 miles (23 km) south of Oaxaca City [1], is famous for its pottery and its August 24–27 festival, Fiesta de San Bartolomé. During the fiesta, masked villagers costumed as half-man half-woman figures in tiaras, blond wigs, tin crowns, and velvet cloaks dance in honor of their patron.
The town’s black pottery, the renowned barro negro sold all over Mexico, is available at the signed pottery Mercado on the right and at a number of cottage factory shops (watch for signs) off the highway, scattered along left (east side) Calle Juárez, marked by a big Doña Rosa sign.
Doña Rosa, who passed away in 1980, pioneered the technique of crafting lovely, big, round jars without a potter’s wheel. With their local clay, Doña Rosa’s descendants and neighbor families regularly turn out acres of glistening black plates, pots, bowls, trees of life, and fetching animals for very reasonable prices (figure on about $20 for a pearly black three-gallon vase, and perhaps $2 for a cute little rabbit).
For a rare treat that you're unlikely to find anywhere else, just north of town, stop in at Rancho la Nopalera [2] where they cultivate and harvest a local beetle to produce a highly valued red dye.
Links:
[1] http://www.moon.com/destinations/oaxaca/oaxaca-city
[2] http://www.moon.com/destinations/oaxaca/oaxaca-valley/south-crafts-route/san-bartolo-coyotepec/cochineal-farm