Mulato chilies, are dried, ripe, mature poblano peppers (part of the highly variable species Capsicum annuum and very similar to the poblano pepper). Mulato chilies are moderately hot, with a sweet, fruity, slightly smoky flavour.
Mulato chilies are closely related to ancho chilies, which are also a variety of dried poblano. The primary difference between the two peppers is that maturity level of the fresh pepper at the time of picking; mulatos are very ripe when picked, making them spicier and fruitier, with chocolate, licorice, and cherry tasting notes. The poblano varieties used to make the two chilies do vary slightly as well, though the maturity at the time of picking has the biggest influence on the taste of the dried chili.
Mulato chilies are not subject to the same naming confusion that plagues their cousin the ancho chili. Mature, purple-red mulato poblanos are grown exclusively for drying, so there tends to be no confusion over whether a recipe is referring to the fresh or the dried pepper.
Mulato chilies are available whole (as shown in the picture), crushed into flakes, and ground into a powder. Whole chilies tend to be easiest to find, though some online retailers are making it easier to obtain the other versions.
Scoville Heat Units
*Some poblano peppers (and consequently some mulato chilies) are considerably hotter than others, even when originating on the same plant. If in doubt, taste a small sample.