Archaeological data from Huexotla, an Aztec-period site in the Valley of Mexico, are used to test the proposition that Mexican states arose and expanded to facilitate specialization and market exchange. By and large, this proposition is not supported by the Huexotla data. During Early Aztec times, the Valley of Mexico was divided into a number of small, autonomous city-states. The Huexotla data suggest that the local economies of these city-states were not characterized by a complex division of labor. Thus, their existence does not seem to have depended upon their facilitating specialization and exchange at the local level. During Late Aztec times, most of Central Mexico came to be dominated by the territorially extensive, administratively complex Aztec empire. The Huexotla data provide evidence of more intensive participation in market exchange, but they also suggest that urban demand for rural foodstuffs and urban control of imperial tribute goods were factors of primary importance in determining the Late Aztec pattern of market exchange. More intensive specialization, or greater complexity in the division of labor within the Valley of Mexico, seems to have played a minor role in the growth of the Late Aztec market system despite the environmental diversity of the marketing region.