There are several places in the play that one can see what kind of character Mercutio is. He was, after all, Romeo's relative and his best friend. In Act 2, Scene I he expresses himself eloquently to Romeo because he can see that Romeo is in love with Juliet, and tries to prevent the love affair because their two families are feuding. He know there's trouble ahead! But Romeo is blinded by love, and nothing Mercutio says or does makes any difference!
To try to help save Romeo and his honor, Mercutio offers to fight Tybalt in Romeo's place. Even though he thinks Romeo is a coward, his love and friendship for him prompts this most gallant of acts. Mercutio ends up being fatally stabbed. As he's dying, he actually curses both families three times Act 3, Scene I. It's Mercutio's death that finally awakens Romeo to the consequences of his actions, but it's already too late! Also, in this act, he displays his saucy, arrogant wit by verbally jesting with Benvolio.
In Act I, Scene 4, Mercutio gets quite riled up by Romeo's declarations of love and begins to quote the famous "Queen Mab" speech. He ends up bitterly mocking Romeo and Romeo has to calm him down.