Maybe from “Totonaca”, a Mexican tribe of the Pre-Columbian era-
Classless, pretentious, obtrusive, the Mexican version of white trash. Mostly blue-collar undereducated people, but can be applied even to a wealthier crowd (nouveaux riches, snob). They’re characterized for having no respect for others. Their only source of information is television. Males usually are truly soccer fans and females are telenovelas (soaps) fans. Most nacos like to name their sons with anglo-saxon names. It may be used as an adjective for both persons and objects.
“El Kevin cree que poniendole neon a su coche va a ser mas rapido, se ve bien naco.”
“Kevin thinks that neon lights on his car will make it faster, it looks so naco.”