What is the name of the paper cut-out decorations used for Day of the Dead?

The paper cut-out decorations used for Day of the Dead are called papel picado.

Papel picado is a traditional Mexican folk craft made by cutting intricate designs into colored tissue paper. Artisans often stack many sheets and use a guide, chisels, and a small mallet to create repeating patterns. Scissors and folded-paper techniques can also be used, especially for smaller or less formal decorations.

During Día de Muertos, papel picado is commonly strung above streets or placed on ofrendas. Designs may show skulls, skeletons, flowers, birds, or geometric patterns. Because the fragile sheets move in the breeze, they are often interpreted on an altar as representing air, one of the four elements traditionally associated with offerings.

The craft is strongly associated with San Salvador Huixcolotla in Puebla, which is widely recognized as an important center of papel picado production. Although Day of the Dead displays made it famous internationally, papel picado is also used for national holidays, weddings, quinceañeras, baptisms, Christmas, and other celebrations. It is therefore a general Mexican decorative art, not an ornament exclusive to Day of the Dead.