Do you tip in dollars/pesos and how much?

It depends on where you are going.

In Cancun, we tip in dollars and tip the same way we do in the US.

In other parts of Mexico, we use pesos but still tip as we do in the US.

In tourist places folks usually tip as in the U.S. Off the beaten path Mexican folks tip much less. Ten percent is considered a good tip.

Depends on your situation and location... I always pay & tip in peso. And usually generously since things are often so inexpensive (when a nice breakfast only costs 35 peso, I might leave 10 peso anyway). This is partly because I get great service, but also because I return to the same hotel & restaurants in Puerto Vallarta year after year and know many of the staff. I also leave 10-20 peso for the room maid each day. My experience is at a local 3-star hotel, not a resort.

Tipping is personal, but a good rule is 10% for most meals, $1.USD or $11.5 MXP per day per person if maid/cook service is great at hotel, B&B or private rental house.
Using your low (1%) credit card or ATM for MXpesos is the way to go.
M

I agree with suze's reply! I always tip in pesos no matter where I am in Mexico!
And, in the Americanized places, such as Cancun, you are expected to tip at the same rate as in the US.