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Since the second decade of the twenty-first century, hybrid social entrepreneurship—combining both for-profit and not-for-profit organizations—has developed a new ecosystem in Mexico. In contrast with the more commonly examined topics in this field (case studies, profiles, and surveys), the aim of this theoretical work was to provide a general overview of hybrid social entrepreneurship in Mexico, identifying the main obstacles hindering the present development of this ecosystem. From a neo-institutional perspective, we emphasize that hybrid social entrepreneurship in Mexico faces challenges because it has developed in an institutionally hostile environment characterized by: 1) structural heterogeneity, 2) legal restraints, and 3) fiscal obstacles. To address this situation, we propose three ways to overcome these challenges and to improve the status of hybrid social entrepreneurial activity in the Mexican economy.