José Rizal's parents were Francisco Mercado and Teodora Alonzo, prosperous farmers who were granted lease of a hacienda and an accompanying rice farm by the Dominicans. He was the seventh child of their eleven children (namely, Saturnina, Paciano, Narcisa, Olympia, Lucia, Maria, Jose, Concepcion, Josephina, Trinidad and Soledad.)

Rizal was a 5th-generation patrilineal descendant of Domingo Lam-co (Chinese: 柯仪南; Pinyin: Ke Yinan), a Chinese immigrant entrepreneur who sailed to the Philippines from Jinjiang, Quanzhou in the mid-17th century.[7] Lam-co married Inez de la Rosa, a Sangley native of Luzon. To free his descendants from the anti-Chinese animosity of the Spanish authorities, Lam-co changed the family surname to the Spanish surname "Mercado" (market) to indicate their Chinese merchant roots. Their original application was for the name "Ricial", apropos their main occupation of farming, which was arbitrarily denied. The name "Rizal" (originally Ricial, the green of young growth or green fields), was adopted by Jose to enable him to travel freely as the Mercados had gained notoriety by their son's intellectual prominence. From early childhood Rizal was already advancing unheard-of political ideas of freedom and individual rights which infuriated the authorities.[8]

Rizal, 11 years old

Aside from indigenous Filipino and Chinese ancestry, recent genealogical research has found that José had traces of Spanish, and Japanese ancestry. His maternal great-great-grandfather (Teodora's great-grandfather) was Eugenio Ursua, a descendant of Japanese settlers, who married a Filipina named Benigna (surname unknown). These two gave birth to Regina Ursua who married a Sangley mestizo from Pangasinán named Atty. Manuel de Quintos, Teodora's grandfather. Their daughter Brígida de Quintos married a Spanish mestizo named Lorenzo Alberto Alonzo, the father of Teodora. Austin Craig mentions Lacandula, Rajah of Tondo at the time of the Spanish incursion, also as an ancestor.