From Rap Dictionary
A cholo is a Mexican-American (or Chicano) gang member, usually wearing Chuck Taylors (or tablitas if there's a Quincenera going on) Dickies, and a Pendelton button shirt over a white t-shirt. And sometimes a really nice Kangol. The word in Spanish directly translates to "pimp". In Spain the word means "cool". It is synonymous with bad ass" or "bad guy". Vatos, cholos, call us what you will" -- Kid Frost (La Raza ).
The word cholo comes from the Mexican dogs "xoloescuincle" like the dogs and the cholos vatos, both are "pelones"
Correction: cholo and chulo are totally separate words, and neither is brand new slang. Cholo is like mestizo, and refers to someone of mixed race. It's appropriate for bicultural people who straddle two worlds, take pride in creative application of Spanglish, etc. Cyprus Hill, for example. Chulo comes from Spain, and literally means pimp. A person described as chulo might be arrogant, conceited, cool, charming -- basically the good AND bad sides of a playa. Chulo as slang usually means cool. Papi chulo, for example. Simon, i agree with the correction. yes cholo and chulo are completely different. In Spain we don't know what cholo means.
Correction number two: In Mexico, for instance, "chulo" means beautiful. You can actually hear that in the mexican movie "Amores Perros". El chivo says: "Mi chulita" (which means: my little pretty one) to his little dead dog when the big black dog he found before killed all others. I think it doesn't have anything to do with pimp there. Refer to this page: chulo for more info.
Can I just add PURO VATO LOCO ESE cholo; street warrior