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When the territories now comprising the states of Arizona and New Mexico were first explored by Spanish Conquistador Francisco Vazquez de Coronado in 1542, he reported his findings on such territories north of Mexico were a "New Mexico". Since then, these territories were named as the Territorios de Nuevo Mexico(Territories of New Mexico).

Spaniards having found great wealth and civilization in Mexico had hoped to find another version of Mexico farther up North. As a result, the territory came to be known as New Mexico. It also got its name because of the civil war in 1848 which caused Mexico to be moved into an upper region. It used to be part of the Mexican empire before we conquered it in the Mexican American war.

When Mexico attained its independence from Spain in 1821, it kept this territories, until it lost them to the United! States during the Mexican-American War of 1846-1848. These lands, which were mostly unsettled due to the harsh environment and hostile native tribes (Apache and Comanche raids were common until American occupation) became the Southwestern United States, but were kept as territories (meaning no 'State of the Union' status was granted until the late 19 and early 20 centuries). In the specific case of New Mexico, it kept its old name unchanged; only translated from Spanish to English.
The Spanish came to it from Mexico and just called it New Mexico.

Yes and no to the above:

THE STATE NAME:The name of this state is an anglicized version of "Nuevo Mexico," the Spanish name for the upper Rio Grande. Mexico, an Aztec spelling, means "place of Mexitli" one of the Aztec gods.

What I copied comes from:

http://www.netstate.com/states/intro/nm_intro.htm

For a different, though not really contradictory, version of the origin of "Mexico," see:

http://en.wikipedia.org/wiki/Name_of_Mexico

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Q: How did New Mexico get its name?
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