1823, from Spanish Diego "James" (see James). Said to have been originally American English slang for "one born of Spanish parents," especially in New Orleans; it was also used of Spanish or Portuguese sailors on English or American ships. By 1900 it had broadened to include non-sailors and shifted to mean chiefly "Italian." James the Greater is the patron saint of Spain, and Diego as generic for "a Spaniard" is attested in English from 1610s. Dago red "cheap Italian wine" is attested by 1899.