Here is what I found - it doesn't sound like anything is really for sure. A couple different opinions.
There are many theories about the origin of the Chihuahua varying from Ancient Egypt, to Europe, to its development in South America, well before Columbus discovered it. What is certain is that the Chihuahua came from Mexico.
The Aztecs bred two types of dogs. The larger one was eaten and the smaller one was kept as a companion and used in religious ceremonies. It was believed that these little dogs acted as a guide for the dead enabling them to cross the River of Death to the Underworld. The dogs were killed and cremated with their owners to guarantee a safe passage.
Spanish Histories available from South America indicate clearly that the Indians kept really small dogs but these were not heard of outside Mexico until the end of the 19th century when the Opera singer Adeline Patti was presented with a male while on tour. When the railway was finished in 1911 Mexico's isolation ended and the small dogs became sought after. The Indians bred them especially for the Americans. In 1923 the Chihuahua Club was established in the U.S.A. and a standard was set down.
At this time a dog called Caranza, owned by the writer and painter Owen Wister, was the most noted sire of the day. He was described as a long coat and started what was considered one of the finest strains in the world, the Meron line of long haired dogs. There are however many reports that long coated Chihuahuas originated in America when smooth coats were mated to Pomeranians, Pappillions and Yorkshire Terriers.
