Located in San Angel, the charming colonial-era neighborhood in the southern part of the city, the "Saturday Market" is my top recommendation for passing a weekend afternoon in Mexico City. The market takes place outside on the Plaza San Jacinto and inside a bazaar building (part of a two-story mansion) next to it. High-quality handicrafts, antiques, art, and Mexican food are all offered here.
In the center of the actual bazaar building is a wonderful Mexican cafe where waiters hustle to serve authentic tacos and frosty margaritas, plus antojitos (finger foods) and traditional dishes such as enchiladas. Marimba music plays in the background. Dozens of small rooms surrounding the courtyard serve as permanent stalls featuring original decorative art pieces. You'll find blown glass, fine jewelry, papier-mâché figures, masks, and embroidered clothing. On adjacent plazas, hundreds of easel artists display their paintings, and surrounding homes abound with antiques, fine rugs, and hand-carved furniture for sale. Members of indigenous groups from Puebla and elsewhere bring their folk art - baskets, masks, pottery, textiles, and so on - to display in the parks. It's open Saturday from 9am to 6pm.