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Cinco de Mayo is a date of great importance for the Mexican and Chicano communities. It marks the victory of the Mexican Army over the French at the Battle of Puebla. Althought the Mexican army was eventually defeated, the "Batalla de Puebla" came to represent a symbol of Mexican unity and patriotism. With this victory, Mexico demonstrated to the world that Mexico and all of Latin America were willing to defend themselves of any foreign intervention. Especially those from imperialist states bent on world conquest.

Cinco de Mayo's history has its roots in the French Occupation of Mexico. The French occupation took shape in the aftermath of the Mexican-American War of 1846-48. With this war, Mexico entered a period of national crisis during the 1850's. Years of not only fighting the Americans but also a Civil War, had left Mexico devastated and bankrupt. On July 17, 1861, President Benito Juarez issued a moratorium in which all foreign debt payments would be suspended for a brief period of two years, with the promise that after this period, payments would resume.

The English, Spanish and French refused to allow president Juarez to do this, and instead decided to invade Mexico and get payments by whatever means necessary. The Spanish and English eventually withdrew, but the French refused to leave. Their intention was to create an Empire in Mexico under Napoleon III. Some have argued that the true French occupation was a response to growing American power and to the Monroe Doctrine (America for the Americans). Napoleon III believed that if the United States was allowed to prosper indiscriminantly, it would eventually become a power in and of itself.
In 1862, the French army began its advance. Under General Ignacio Zaragoza, 5,000 ill-equipped Mestizo and Zapotec Indians defeated the French army in what came to be known as the "Batalla de Puebla" on the fifth of May.
In the United States, the "Batalla de Puebla" came to be known as simply "5 de Mayo" and unfortunately, many people wrongly equate it with Mexican Independence which was on September 16, 1810, nearly a fifty year difference. Over, the years Cinco de Mayo has become very commercialized and many people see this holiday as a time for fun and dance. Oddly enough, Cinco de Mayo has become more of Chicano holiday than a Mexican one. Cinco de Mayo is celebrated on a much larger scale here in the United States than it is in Mexico. People of Mexican descent in the United States celebrate this significant day by having parades, mariachi music, folklorico dancing and other types of festive activities.

This article is taken from http://clnet.ucla.edu/cinco.html