Mercutio (whose name is derived from the word "mercurial," meaning "volatile") is Romeo's sword-fight loving BFF. He never backs down from a duel and, although he's neither a Montague nor a Capulet, he gets involved in the long-standing family feud on the side of the Montagues and is killed by Tybalt in Act 3, Scene 1.
In almost every performance, Mercutio steals the show. Audiences love him – he's dirty and funny and out of control. Compared to him, Romeo and Juliet can seem whiny and repetitive. There are some productions of Romeo and Juliet that never recover after Mercutio dies; the whole show can go downhill without him. Mercutio is technically a minor character, but his personality has such a disproportionate impact that some critics argue he has to die or he would take over the play. There's an old story that Shakespeare himself admitted that he had to kill Mercutio – or else, he said, Mercutio would have killed him.
Mercutio is also famous for his staunch opposition to the idea of love (between a man and a woman, that is). When Romeo complains about the heartache of his unrequited love for Rosaline, Mercutio tells him to stop whining about it:
If love be rough with you, be rough with love;
Prick love for pricking, and you beat love down. (1.4.4)
It's not just "love" that Mercutio has a problem with. He's also pretty hostile toward women and female sexuality in general. The clearest example of this is when he lists Rosaline's body parts in a crude monologue that makes fun of Romeo and a popular poetic convention (the "blazon," a poetic technique that catalogues a woman's body parts and compares them to things in nature):
I must conjure him.
I conjure thee by Rosaline's bright eyes,
By her high forehead and her scarlet lip,
By her fine foot, straight leg and quivering thigh
And the demesnes that there adjacent lie,
That in thy likeness thou appear to us! (2.1.1)
Some literary critics and actors interpret Mercutio's hostility toward women and heterosexual love as an indication of homosexuality (or bisexuality). For these scholars, Mercutio's blatantly homoerotic jokes (they're all over the play) and Tybalt's accusation that Mercutio "consortest with Romeo" (3.1.3) are further evidence that Mercutio is gay. Mercutio's sexuality is up for debate, but the thing we know for sure about Shakespeare's work is that it's full of men who value male friendship and comradery over male-female relationships. (Think, for example, of Antonio and Bassanio in The Merchant of Venice.)
Other interpretations put a psychological spin on Mercutio's strange, imaginative rants.
The Queen Mab speech is, of course, one of Mercutio's big moments and a challenge to interpret. In the 1996 Baz Luhrmann film, Romeo + Juliet, a cross-dressing Mercutio takes drugs just before the Queen Mab speech. In the Franco Zeffirelli 1968 film version, Mercutio seems manic-depressive; the Queen Mab speech starts out as an energetic manic episode but soon crumbles into a dark depression. Check out "Symbols" if you want to know more.