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Oaxaca (officially Oaxaca de Juárez) State capital of Oaxaca, s Mexico. Oaxaca is an agricultural state: coffee is the principal crop. Tourists use the city as a base for exploring archaeological sites, such as Monte Albán. The city is renowned for its jewellery and hand-woven textiles. Founded by the Aztecs, Spain captured Oaxaca in 1521. It played a major role in Mexico's struggle for independence. Pop. (2000) 256,848.