The word comes from an indigenous Mexican/Native word coming from the Nahuatl (Aztec) word for “native.”
Here is a definition according to the scholastic Handbook of
Texas:
"According to
one explanation, the pre-Columbian tribes (Aztecs) in
Mexico called themselves Meshicas, and the Spaniards, employing the letter x (which at that time represented a “sh” and “ch” sound), spelled it Mexicas. The Indians later referred to themselves as Meshicanos and even as Shicanos, thus giving birth to the term Chicano."
Therefore, the term stuck to all Americans of Mexican decent. Sometimes, the word “Chicano” can be applied to a Mexican national who was brought to the
United States at a very early age and adapted the “Chicano” lifestyle.