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Exotic and nearly unpronounceable, with its 11 letters and five syllables, Zihuatanejo embraces its past as a sleepy fishing village, despite the creation nearby of a major resort.

Located on a picturesque bay on the southwestern Pacific coast, the town is backed by steep hillsides and lush rain forest. Zihuatanejo (pronounced see-wa-tan-NAY-ho but abbreviated to See-wat by just about everyone) is about 130 miles north of Acapulco. Until the 1970s, when the Mexican government established the adjacent resort of Ixtapa, Zihuatanejo was virtually unknown to anyone but locals.

It is said that the Spanish, using this bay as a jumping-off point for a trade route to Asia in the 16th century, spoke disparagingly of the area and its isolation, leaving little behind except some coconuts that have since germinated into thousands of swaying palms.

Zihuatanejo manages to retain the bucolic simplicity and friendliness of a coastal village, despite the low-key commercialism that has sprouted in the shadow of the resort mecca 4 miles away. Ixtapa (eeks-TAH-pa) has several large beachfront hotels, two golf courses, a 600-slip marina and a lengthy stretch of shops, galleries and restaurants.

Ixtapa is the main destination in these parts for overnight visitors, although See-wat has two dozen hotels spread around the bay. Cruise ships, headed north from Acapulco or south from Puerto Vallarta, anchor in the protected natural harbor.

Along Zihuatanejo's narrow, red brick streets, small family-run shops feature lots of crafts made by the people in mountain villages of neighboring states. Visitors can find lacquered boxes, ceremonial masks, rugs, hammocks and regionally made ceramics.

For instance, Galleria Maya, in the center of town, has folk art and leather goods. An open-air craft market with more than 250 stands also lines Calle 5 de Mayo on the west side of town, and another colorful open market is a few blocks away on the east side.

Sightseeing options are many. Congenial, English-speaking touts hanging out at the municipal dock where cruise ship passengers arrive offer package tours of the area, but you can easily do it on your own in segments.

Small boats called pangas run from the pier to Las Gatas Beach, directly across the bay, until about 5 p.m. It takes about 10 minutes to get there, and the round-trip ticket, bought at the pier, is about $2.50. The beach is accessible only by boat.

Otherwise, there's a broad municipal beach in front of the Paseo del Pescador, a tree-shaded brick sidewalk. The paseo is lined with shops and seafood restaurants. Musicians, schoolchildren and townsfolk amble by, taking in the beach and the panoramic view of the bay.

A number of good, inexpensive restaurants are within a few square blocks and offer a casual lunch. For a more extravagant meal, hold off until you get around to Playa la Madera or Playa la Ropa, two great beaches that are a bit of a hike from downtown.

Several hotels hang over the bluffs above these beaches, with restaurants offering superb views and good food.

At La Casa que Canta (the House That Sings), situated on a pinnacle that separates the two beaches, the owner collects indigenous art, and the lobbies feature paintings and hand-carved and hand-painted furniture. The hotel swimming pool seems to drop off the edge of the cliff.

From here, you can head along the beach in either direction, but Playa la Ropa is the longest and most picturesque beach, with colorful sailboats and more than a mile of land fringed by coconut palms.

Back in town, the rewards of Zihuatanejo are the simple pleasures of sitting in a cafe with a margarita, a cerveza (beer) or a coffee and watching the world go by. It is polite to nod to the friendly locals passing by on an ordinary afternoon, or you may happen by on a fiesta day (there are more than two dozen a year in Mexico), which can produce a traditional procession.

For golfers, Ixtapa does have the edge on See-wat, with two good, 18-hole courses open to the public:

Campo de Golf, designed by Robert Trent Jones Jr., is on a wildlife preserve that runs from a coconut plantation to the beach. It costs $55 for 18 holes with a cart.

The tighter, less shady Marina Ixtapa course, designed by Robert Von Hagge, features lots of water and costs $60 with cart.

On the water, a half-day of sportfishing for blue marlin, tuna, dorado or sailfish runs $250, including lunch; the operator is Sea & Sand Experience, based at Ixtapa.

Ixtapa does have a large handicrafts market, with about 150 stands, plus an upscale mall environment with clusters of boutiques, restaurants and cafes in colonial-style buildings with patios.

Minibuses, which cost about 40 cents each way, run frequently between downtown Zihuatanejo and the Ixtapa resort area; a cab is about $8.

Jim Kerr is a freelance writer who lives in Raleigh, N.C.