In Oaxaca, Mexico, some Indian villages have long established textile production traditions. Originally, craftpersons wove textiles, known as sarapes, for use within their own community or for trade at nearby indigenous markets. These textiles retained their local appeal until they were replaced by commercially produced items. To survive in a changing world, the producers turned to production for tourist and export markets;The purpose of the research was to provide a multifaceted approach to the study of the textile handcraft market system of Teotitlan del Valle. The handcraft market is a social system formed by the interactions among producers, vendors, and consumers. This research emphasized (1) the business and personal characteristics of handcraft producers and (2) textile product evolution in response to changing consumers. To understand the craft producer, the researcher profiled the entrepreneurial textile producers in Teotitlan del Valle. The focus of the profiles was on business practices and included investigation of personal background, production methods, and marketing strategies. To understand product change, the researcher classified and described Teotitlan del Valle handcraft evolution in terms of market change, consumer preference, and producer response. The focus of product evolution was on changes in product form, raw materials, colors, and design;Profiles of the producer-entrepreneur were developed from case studies that used in-depth interviews and participant observation in home workshops and markets as the methods for data collection. The four producer-entrepreneur profiles identified were Externally Oriented, Mass Production Entrepreneurs; Internally Oriented, Local Showroom Entrepreneurs; Outdoor Market Entrepreneurs; and Design Entrepreneurs. The profiles were based on personal background, production methods, marketing techniques, and business practices salient to each group. The Teotitlan del Valle profiles were discussed in relation to profiles of midwestern United States manufacturing entrepreneurs. The findings serve as examples of possible roles for handcraft producer-entrepreneurs who are developing export and tourist markets;Three periods of handcraft product evolution were the Product Experimentation Period, the Product Expansion Period, and the Target Market Segmentation Period. Handcraft producers who are developing export and tourist markets may use the findings as possible stages of handcraft change within the context of an evolving market system;Handcraft researchers, craft producers, and individuals working in rural economic development will benefit from understanding the dynamics of the handcraft market system and the functioning of each component part as it relates to business practices and product development.